Proper regulation of plasma membrane protein endocytosis by external stimuli is required for cell growth and survival. In yeast, excess levels of certain nutrients induce endocytosis of the cognate permeases to prevent toxic accumulation of metabolites. The α-arrestins, a family of trafficking adaptors, stimulate ubiquitin-dependent and clathrin-mediated endocytosis by interacting with both a client permease and the ubiquitin ligase Rsp5. However, the molecular mechanisms that control α-arrestin function are not well understood. Here, we show that α-arrestin Aly1/Art6 is a phosphoprotein that specifically interacts with and is dephosphorylated by the Ca(2+)- and calmodulin-dependent phosphoprotein phosphatase calcineurin/PP2B. Dephosphorylation of Aly1 by calcineurin at a subset of phospho-sites is required for Aly1-mediated trafficking of the aspartic acid and glutamic acid transporter Dip5 to the vacuole, but it does not alter Rsp5 binding, ubiquitinylation, or stability of Aly1. In addition, dephosphorylation of Aly1 by calcineurin does not regulate the ability of Aly1 to promote the intracellular sorting of the general amino acid permease Gap1. These results suggest that phosphorylation of Aly1 inhibits its vacuolar trafficking function and, conversely, that dephosphorylation of Aly1 by calcineurin serves as a regulatory switch to promote Aly1-mediated trafficking to the vacuole.