Mutations in the phosphatidylinositol 4,5-bisphosphate (PtdIns4,5P(2)) 5-phosphatase OCRL cause Lowe syndrome, which is characterised by congenital cataracts, central hypotonia, and renal proximal tubular dysfunction. Previous studies have shown that OCRL interacts with components of the endosomal machinery; however, its role in endocytosis, and thus the pathogenic mechanisms of Lowe syndrome, have remained elusive. Here, we show that via its 5-phosphatase activity, OCRL controls early endosome (EE) function. OCRL depletion impairs the recycling of multiple classes of receptors, including megalin (which mediates protein reabsorption in the kidney) that are retained in engorged EEs. These trafficking defects are caused by ectopic accumulation of PtdIns4,5P2 in EEs, which in turn induces an N-WASP-dependent increase in endosomal F-actin. Our data provide a molecular explanation for renal proximal tubular dysfunction in Lowe syndrome and highlight that tight control of PtdIns4,5P2 and F-actin at the EEs is essential for exporting cargoes that transit this compartment. The EMBO Journal (2011) 30, 4970-4985. doi: 10.1038/emboj.2011.354; Published online 4 October 2011