μ-Type opioid receptors (MORs) are members of the large seven-transmembrane receptor family which transduce the effects of both endogenous neuropeptides and clinically important opioid drugs. Prolonged activation of MORs promotes their proteolytic degradation by endocytic trafficking to lysosomes. This down-regulation process is known to contribute to homeostatic regulation of cellular opioid responsiveness, but mechanisms that mediate and control MOR down-regulation have not been defined. We show here that lysosomal down-regulation of MORs is ESCRT (endosomal sorting complex required for transport)-dependent and involves ubiquitin-promoted transfer of internalized MORs from the limiting endosome membrane to lumen. We also show that MOR down-regulation measured by conventional radioligand binding assay is determined specifically by ubiquitination in the first cytoplasmic loop. Surprisingly, we were unable to find any role of ubiquitination in determining whether internalized receptors recycle or are delivered to lysosomes. Instead, this decision is dictated specifically by the MOR C-tail and occurs irrespectively of the presence or absence of receptor ubiquitination. Our results support a hierarchical organization of discrete ubiquitin-independent and -dependent sorting operations, which function non-redundantly in the conserved down-regulation pathway to mediate precise endocytic control. Furthermore, they show that this hierarchical mechanism discriminates the endocytic regulation of naturally occurring MOR isoforms. Moreover, they are the first to reveal, we believe, for any seven-transmembrane receptor, a functional role of ubiquitination in the first cytoplasmic loop.