Polarized epithelial cells coexpress two almost identical AP-1 clathrin adaptor complexes: the ubiquitously expressed AP-1A and the epithelial cell-specific AP-1B. The only difference between the two complexes is the incorporation of the respective medium subunits micro1A or micro1B, which are responsible for the different functions of AP-1A and AP-1B in TGN to endosome or endosome to basolateral membrane targeting, respectively. Here we demonstrate that the C-terminus of micro1B is important for AP-1B recruitment onto recycling endosomes. We define a patch of three amino acid residues in micro1B that are necessary for recruitment of AP-1B onto recycling endosomes containing phosphatidylinositol 3,4,5-trisphosphate [PI(3,4,5)P(3)]. We found this lipid enriched in recycling endosomes of epithelial cells only when AP-1B is expressed. Interfering with PI(3,4,5)P(3) formation leads to displacement of AP-1B from recycling endosomes and missorting of AP-1B-dependent cargo to the apical plasma membrane. In conclusion, PI(3,4,5)P(3) formation in recycling endosomes is essential for AP-1B function.