Mutations in the HFE gene and a newly identified second transferrin receptor gene, TfR2, cause hemochromatosis. The cognate proteins, HFE and TfR2, are therefore of key importance in human iron homeostasis. HFE is expressed in small intestinal crypt cells where transferrin-iron entry may determine subsequent iron absorption by mature enterocytes, but the physiological function of TfR2 is unknown. Using specific peptide antisera, we examined the duodenal localization of HFE and TfR2 in humans and mice, with and without HFE deficiency, by confocal microscopy. We also investigated potential interactions of these proteins in human intestinal cells in situ. Duodenal expression of HFE and TfR2 (but not TfR1) in wild-type mice and humans was restricted to crypt cells, in which they co-localized. HFE deficiency disrupted this interaction, altering the cellular distribution of TfR2 in human crypts. In human Caco-2 cells, HFE and TfR2 co-localized to a distinct CD63-negative vesicular compartment showing marked signal enhancement on exposure to iron-saturated transferrin ligand, indicating that HFE preferentially interacts with TfR2 in a specialized early endosomal transport pathway for transferrin-iron. This interaction occurs specifically in small intestinal crypt cells that differentiate to become iron-absorbing enterocytes. Our immunohistochemical findings provide evidence for a novel mechanism for the regulation of iron balance in mammals.