Heterotetrameric adaptor protein complexes are important mediators of cargo protein sorting in clathrin-coated vesicles. The cell type-specific expression of alternate mu chains creates distinct forms of AP-1 with altered cargo sorting, but how these subunits confer differential function is unclear. Whereas some studies suggest the mu subunits specify localization to different cellular compartments, others find that the two forms of AP-1 are present in the same vesicle but recognize different cargo. Yeast have two forms of AP-1, which differ only in the mu chain. Here we show that the variant mu chain Apm2 confers distinct cargo-sorting functions. Loss of Apm2, but not of Apm1, increases cell surface levels of the v-SNARE Snc1. However, Apm2 is unable to replace Apm1 in sorting Chs3, which requires a dileucine motif recognized by the gamma/sigma subunits common to both complexes. Apm2 and Apm1 colocalize at Golgi/early endosomes, suggesting that they do not associate with distinct compartments. We identified a novel, conserved regulatory protein that is required for Apm2-dependent sorting events. Mil1 is a predicted lipase that binds Apm2 but not Apm1 and contributes to its membrane recruitment. Interactions with specific regulatory factors may provide a general mechanism to diversify the functional repertoire of clathrin adaptor complexes.