The transmembrane sialoglycoprotein podocalyxin is thought to be essential in the fine interdigitating foot process structure of the podocyte. The intracellular COOH-terminal amino acids Asp-Thr-His-Leu (DTHL) of podocalyxin comprise a putative ligand for a type I PSD95-Dlg-zona occludens-1 (PDZ) domain. A 20-amino acid synthetic peptide containing this motif was used to screen a cDNA library, and clones of rabbit Na(+)/H(+) exchange regulatory factor-2 (NHERF-2) were obtained. In vitro analysis demonstrated that each PDZ domain of NHERF-2 could bind podocalyxin independently. NHERF-2 coprecipitated from glomerular extracts with podocalyxin, and podocalyxin and NHERF-2 colocalized in the glomerular capillary loops, indicating that podocalyxin and NHERF-2 may interact in vivo. Podocalyxin peptide missing the terminal leucine (-DTHL) failed to interact with NHERF-2 in vitro. Podocalyxin localized to the apical membrane of transfected Madin-Darby canine kidney (MDCK) cells. However, mutant podocalyxin (missing a functional DTHL COOH-terminal motif) showed cytoplasmic and apical membrane localization in transfected cells and was also less stable at the apical membrane, as assessed by confocal microscopy and biotinylation studies. Mutant podocalyxin did lower the transepithelial resistance of MDCK cell monolayers, albeit to a lesser extent than full-length podocalyxin. We conclude that podocalyxin can interact with both PDZ domains of NHERF-2 and that this interaction requires the intact COOH terminus of podocalyxin, which is also responsible for the efficient apical localization of podocalyxin in transfected MDCK cells. These results suggest that the interaction of podocalyxin with NHERF-2 may function to efficiently retain podocalyxin at the apical surface of the podocyte and provide a mechanism linking podocalyxin to the actin cytoskeleton.