FOXO transcription factors have been shown to regulate longevity in model organisms and are associated with longevity in humans. To gain insight into how FOXO functions to increase lifespan, we examined the subcellular localization of DAF-16 in C. elegans. We show that DAF-16 is localized to endosomes and that this endosomal localization is increased by the insulin-IGF signaling (IIS) pathway. Endosomal localization of DAF-16 is modulated by endosomal trafficking proteins. Disruption of the Rab GTPase activating protein TBC-2 increases endosomal localization of DAF-16, while inhibition of TBC-2 targets, RAB-5 or RAB-7 GTPases, decreases endosomal localization of DAF-16. Importantly, the amount of DAF-16 that is localized to endosomes has functional consequences as increasing endosomal localization through mutations in tbc-2 reduced the lifespan of long-lived daf-2 IGFR mutants, depleted their fat stores, and DAF-16 target gene expression. Overall, this work identifies endosomal localization as a mechanism regulating DAF-16 FOXO, which is important for its functions in metabolism and aging.