PDZ proteins usually contain multiple protein–protein interaction domains and act as molecular scaffolds that are important for the generation and maintenance of cell polarity and cell signaling. Here, we identify and characterize TIP-1 as an atypical PDZ protein that is composed almost entirely of a single PDZ domain and functions as a negative regulator of PDZ-based scaffolding. We found that TIP-1 competes with the basolateral membrane mLin-7/CASK complex for interaction with the potassium channel Kir 2.3 in model renal epithelia. Consequently, polarized plasma membrane expression of Kir 2.3 is disrupted resulting in pronounced endosomal targeting of the channel, similar to the phenotype observed for mutant Kir 2.3 channels lacking the PDZ-binding motif. TIP-1 is ubiquitously expressed, raising the possibility that TIP-1 may play a similar role in regulating the expression of other membrane proteins containing a type I PDZ ligand.