Sorting nexin 17 (SNX17) functions as cargo receptor on endosomal membranes that enables the recycling of numerous membrane cargo proteins by binding to the Retriever complex. Yet, little is known how SNX17 activity or its membrane recruitment is regulated. Here, we report that phosphorylation of SNX17 at serine 38 (Ser38) within the phox (PX) domain serves as a critical regulatory switch governing its endosomal localization and function. A mutant form mimicking the phosphorylated state disrupts SNX17’s ability to bind phosphatidylinositol-3-phosphate (PI3P), which in turn impairs its association with early endosomal membranes and inactivates SNX17-dependent cargo-recycling in cells. Furthermore, our results demonstrate that Ser38 is part of an autoinhibitory mechanism to regulate SNX17 cargo binding. Collectively, these findings provide new insights into the dynamic regulation of SNX17 activity and Retriever-mediated sorting processes. It also highlights SNX17 Ser38 phosphorylation as a critical regulatory mechanism that controls SNX17’s endosomal localization and cargo recycling function.