Early endosome antigen 1 (EEA1) is a 170-kDa polypeptide required for endosome fusion in mammalian cells. The COOH terminus of EEA1 contains a FYVE domain that interacts specifically with phosphatidylinositol 3-phosphate (PtdIns-3-P) and a Rab5 GTPase binding region adjacent to the FYVE domain. The dual interaction of EEA1 with both PtdIns-3-P and Rab5 has been hypothesized to provide the specificity required to target EEA1 to early endosomes. To test this hypothesis, we generated truncated (amino acids 1277--1411) and full-length EEA1 constructs containing point mutations in the COOH terminus that impair Rab5 but not PtdIns-3-P binding. These constructs localized to endosomes in intact cells as efficiently as their wild-type counterparts. Furthermore, overexpression of the truncated constructs, both wild-type and mutated, impaired the function of endogenous EEA1 resulting in the accumulation of small, untethered endosomes. These results suggest that association with Rab5 is not necessary for the initial binding and tethering functions of EEA1. A role for Rab5 binding was revealed, however, upon comparison of endosomes in cells expressing full-length wild-type or mutated EEA1. The mutant full-length EEA1 caused the accumulation of endosome clusters and suppressed the enlargement of endosomes caused by a persistently active form of Rab5 (Rab5Q79L). In contrast, expression of wild-type EEA1 with Rab5Q79L enhanced this enlargement. Thus, endosome tethering depends on the interaction of EEA1 with PtdIns-3-P, and its interaction with Rab5 appears to regulate subsequent fusion.