The subcellular localization of the epidermal growth factor receptor (EGFR) in polarized epithelial cells profoundly affects the activity of the intracellular signaling pathways activated after EGF ligand binding. Therefore, changes in EGFR localization and signaling are implicated in various human diseases, including different types of cancer. We have performed the first in vivo EGFR localization screen in an animal model by observing the expression of the EGFR ortholog LET-23 in the vulval epithelium of live C. elegans larvae. After systematically testing all genes known to produce an aberrant vulval phenotype, we have identified 81 genes regulating various aspects of EGFR localization and expression. In particular, we have found that ERM-1, the sole C. elegans Ezrin/Radixin/Moesin homolog, regulates EGFR localization and signaling in the vulval cells. ERM-1 interacts with the EGFR at the basolateral plasma membrane in a complex distinct from the previously identified LIN-2/LIN-7/LIN-10 receptor localization complex. We propose that ERM-1 binds to and sequesters basolateral LET-23 EGFR in an actin-rich inactive membrane compartment to restrict receptor mobility and signaling. In this manner, ERM-1 prevents the immediate activation of the entire pool of LET-23 EGFR and permits the generation of a long-lasting inductive signal. The regulation of receptor localization thus serves to fine-tune the temporal activation of intracellular signaling pathways.