Erythropoietin (Epo) binding to the Epo receptor (EpoR) elicits downstream signaling that is essential for red blood cell production. One important negative regulatory mechanism to terminate Epo signaling is Epo-induced EpoR endocytosis and degradation. Defects in this mechanism play a key role in the overproduction of erythrocytes in primary familial and congenital polycythemia (PFCP). Here we have identified a novel mechanism mediating Epo-dependent EpoR internalization. Epo induces Cbl-dependent ubiquitination of the p85 regulatory subunit of PI3K, which binds to phosphotyrosines on EpoR. Ubiquitination allows p85 to interact with the endocytic protein epsin-1, thereby driving EpoR endocytosis. Knockdown of Cbl, expression of its dominant negative forms, or expression of an epsin-1 mutant devoid of ubiquitin-interacting motifs all compromise Epo-induced EpoR internalization. Mutated EpoRs mimicking those from PFCP patients cannot bind p85, co-localize with epsin-1, or internalize on Epo stimulation and exhibit Epo hypersensitivity. Similarly, knockdown of Cbl also causes Epo hypersensitivity in primary erythroid progenitors. Restoring p85 binding to PFCP receptors rescues Epo-induced epsin-1 co-localization and EpoR internalization and normalizes Epo hypersensitivity. Our results uncover a novel Cbl/p85/epsin-1 pathway in EpoR endocytosis and show that defects in this pathway contribute to excessive Epo signaling and erythroid hyperproliferation in PFCP.