Members of the interferon‐induced transmembrane (IFITM) protein family inhibit the entry of a wide range of viruses. Viruses often exploit the endocytosis pathways to invade host cells and escape from the endocytic vesicles often in response to low pH. Localization to these endocytic vesicles is essential for IFITM3 to interfere with the cytosolic entry of pH‐dependent viruses. However, the nature of the sorting signal that targets IFITM3 to these vesicles is poorly defined. In this study, we report that IFITM3 possesses a YxxΦ sorting motif, i.e. 20‐YEML‐23, that enables IFITM3 to undergo endocytosis through binding to the μ2 subunit of the AP‐2 complex. IFITM3 accumulates at the plasma membrane as a result of either mutating 20‐YEML‐23, depleting the μ2 subunit or overexpressing μ2 mutants. Importantly, blocking endocytosis of IFITM3 abrogates its ability to inhibit pH‐dependent viruses. We have therefore identified a critical sorting signal, namely 20‐YEML‐23, that controls both the endocytic trafficking and the antiviral action of IFITM3. This finding also reveals that as an endocytic protein, IFITM3 first arrives at the plasma membrane before it is endocytosed and further traffics to the late endosomes where it acts to impede virus entry.