The PDZ target motifs located in the C-terminal end of many receptors and ion channels mediate protein-protein interactions by binding to specific PDZ-containing proteins. These interactions are involved in the localization of surface proteins on specialized membrane domains of neuronal and epithelial cells. However, the molecular mechanism responsible for this PDZ protein-dependent polarized localization is still unclear. This study first demonstrated that the epithelial gamma-aminobutyric acid (GABA) transporter (BGT-1) contains a PDZ target motif that mediates the interaction with the PDZ protein LIN-7 in Madin-Darby canine kidney (MDCK) cells, and then investigated the role of this interaction in the basolateral localization of the transporter. It was found that although the transporters from which the PDZ target motif was deleted were still targeted to the basolateral surface, they were not retained but internalized in an endosomal recycling compartment. Furthermore, an interfering BGT peptide determined the intracellular relocation of the native transporter. These data indicate that interactions with PDZ proteins determine the polarized surface localization of target proteins by means of retention and not targeting mechanisms. PDZ proteins may, therefore, act as a sort of membrane protein sorting machinery which, by recognizing retention signals (the PDZ target sequences), prevents protein internalization.