Cells rely on the coordinated regulation of lipid phosphoinositides and Rab GTPases to define membrane compartment fates along distinct trafficking routes. The family of disease-related myotubularin (MTM) phosphoinositide phosphatases includes catalytically inactive members, or pseudophosphatases, with poorly understood functions. We found that Drosophila MTM pseudophosphatase Sbf coordinates both phosphatidylinositol 3-phosphate (PI(3)P) turnover and Rab21 GTPase activation in an endosomal pathway that controls macrophage remodeling. Sbf dynamically interacts with class II phosphatidylinositol 3-kinase and stably recruits Mtm to promote turnover of a PI(3)P subpool essential for endosomal trafficking. Sbf also functions as a guanine nucleotide exchange factor that promotes Rab21 GTPase activation associated with PI(3)P endosomes. Of importance, Sbf, Mtm, and Rab21 function together, along with Rab11-mediated endosomal trafficking, to control macrophage protrusion formation. This identifies Sbf as a critical coordinator of PI(3)P and Rab21 regulation, which specifies an endosomal pathway and cortical control.