Endocytosis modulates cell responses by removing and recycling receptors from the cell surface. Type I angiotensin II receptors (AT1R) are somewhat unique in that they are expressed at apical (AP) and basolateral (BL) membranes in proximal tubule cells and both receptor sites undergo endocytosis. We analyzed AT1R cytoplasmic (-COOH) tail deletion mutants to determine whether classic AT1R endocytosis motifs functioned similarly in polarized cells and simultaneously altered receptor properties. Serially truncating the AT1R tail had little effect on AP/BL AT1R distribution as determined by 125I-angiotensin II binding in LLCPK(Cl4) cells transfected with an AT1R transcript. AP AT1R expression required the proximal 12 amino acids in the AT1R-COOH tail. Deleting all but the proximal 12 aa of the AT1R-COOH tail (T316L mutant) decreased AP AT1R internalization at 20 min (17 +/- 6%; p < 0.05 versus full-length; n = 5) and inhibited AP AT1R-stimulated arachidonic acid release (counts released per milligram of protein at 20 min: full-length, 18,762 +/- 4018; T316L, 2430 +/- 1711; n = 4; p < 0.02). Endosomal fusion assays were performed using peptide sequences of regions in the AT1R tail involved in endocytosis (YFLQLLKYIPP [LL] and LSTKMSTLSY [STL]). Peptide STL significantly inhibited endosomal fusion (22 +/- 10% of control; n = 5; p < 0.05 versus positive control). Peptide LL had no significant inhibitory effect. AT(1)R in polarized cells contain dominant endocytosis signals but these motifs do not correlate with AP or BL AT1R expression. Moreover, peptide sequences within the AT1R-COOH tail necessary for endocytosis also modulate endosomal fusion properties.