Active Src localization at focal adhesions (FAs) is essential for cell migration. How this pool is linked mechanistically to the large pool of Src at late endosomes (LEs)/lysosomes (LY) is not well understood. Here, we used inducible Tsg101 gene deletion, TSG101 knockdown, and dominant-negative VPS4 expression to demonstrate that the localization of activated cellular Src and viral Src at FAs requires the endosomal-sorting complexes required for transport (ESCRT) pathway. Tsg101 deletion also led to impaired Src-dependent activation of STAT3 and focal adhesion kinase and reduced cell migration. Impairment of the ESCRT pathway or Rab7 function led to the accumulation of active Src at aberrant LE/LY compartments followed by its loss. Analyses using fluorescence recovery after photo-bleaching show that dynamic mobility of Src in endosomes is ESCRT pathway-dependent. These results reveal a critical role for an ESCRT pathway-dependent LE/LY trafficking step in Src function by promoting localization of active Src to FAs.