The mechanisms by which epithelial cells regulate the presence of microvilli on their apical surface are largely unknown. A potential regulator is EBP50/NHERF1 (ERM-binding phosphoprotein of 50 kD/Na(+)-H(+) exchanger regulatory factor), a microvillar scaffolding protein with two PDZ domains followed by a C-terminal ezrin-binding domain. Using RNAi and expression of RNAi-resistant EBP50 mutants we systematically show that EBP50 is necessary for microvillar assembly and requires that EBP50 has both a functional first PDZ domain and an ezrin-binding site. Expression of mutants mimicking Cdc2 or PKC phosphorylation are nonfunctional in microvillar assembly. Biochemical analysis reveals that these mutants are defective in PDZ1 accessibility when PDZ2 is occupied, and can be rendered functional in vivo by additional mutation of PDZ2. EBP50 is not necessary for mitotic cell microvilli, and PKC activation causes a rearrangement of microvilli on cells due to phosphorylation-dependent loss of EBP50 function. Thus, EBP50 is a critical factor that regulates microvilli assembly and whose activity is regulated by signaling pathways and occupation of its PDZ2 domain.