Establishment of plasma membrane polarity involves numerous intracellular sorting events. In the past few years, it has become apparent that there is a subapical, non-Golgi compartment located in the hub of the sorting pathways involved. This 'subapical compartment', which probably consists of a heterogeneous subset of functionally distinct domains related to endosomes, contains some well-characterized components involved in polarity-dependent sorting and targeting of proteins and lipids. This article discusses the evidence supporting the existence of such a compartment, its biogenesis and its role in cell polarity.