The small GTPases of the Rab family act as a molecular switch regulating various aspects of membrane trafficking through the selective recruitment of effector proteins. Whereas Rab7 has been classically involved in the regulation of transport within the endolysosomal network, persistent controversy remains as to whether Rab7 also plays a role in earlier steps of endosomal trafficking. In this study, we show that Rab7 depletion or inactivation results in enlargement of both early and late endosomes. Rab7 depletion led to the retention of a significant fraction of internalized low‐density lipoproteins (LDL) mainly in enlarged early endosomes (EE). As a result, LDL processing and the transcriptional regulation of sterol‐sensitive genes were impaired. We found that Rab7 activity was also required for the sorting of the mannose‐6‐phosphate receptor, the interferon alpha‐receptor and the Shiga toxin B‐subunit. In contrast, epidermal growth factor (EGF) sorting at the EE or the recycling of transferrin and LDL‐R were not affected by Rab7 depletion. Our findings demonstrate that in addition to regulating late endosomes (LE) to lysosomes transport, Rab7 plays a functional role in the selective sorting of distinct cargos at the EE and that the Rab5 to Rab7 exchange occurs early in the endosomal maturation process.