By screening for Drosophila mutants exhibiting aberrant bride of sevenless (Boss) staining patterns on eye imaginal disc epithelia, we have recovered a point mutation in Hsc70-4, the closest homologue to bovine clathrin uncoating ATPase. Although the mutant allele was lethal, analysis of mutant clones generated by FLP/FRT recombination demonstrated that the Sevenless-mediated internalization of Boss was blocked in mutant Hsc70-4 eye disc epithelial cells. Endocytosis of other probes was also greatly inhibited in larval Garland cells. Immunostaining and EM analysis of the mutant cells revealed disruptions in the organization of endosomal/lysosomal compartments, including a substantial reduction in the number of clathrin-coated structures in Garland cells. The Hsc70-4 mutation also interacted genetically with a dominant-negative mutant of dynamin, a gene required for the budding of clathrin-coated vesicles (CCVs). Consistent with these phenotypes, recombinant mutant Hsc70 proteins exhibited diminished clathrin uncoating activity in vitro. Together, these data provide genetic support for the long-suspected role of Hsc70 in clathrin-mediated endocytosis, at least in part by inhibiting the uncoating of CCVs.