P2X4 and P2X7 are the predominant P2X receptor subtypes expressed in immune cells. The upregulation of P2X4 in microglia contributes to neuropathic pain following nerve injury. Mechanisms involved in its regulation are not well understood although we have previously shown that it is constitutively retrieved from the plasma membrane and resides predominantly within intracellular compartments. By immunofluorescence and confocal imaging we have shown that endogenous P2X4 receptors in cultured rat microglia, vascular endothelial cells and freshly isolated peritoneal macrophages are localized predominantly to lysosomes. Lysosomal targeting is mediated via a dileucine-type motif within the N-terminus, together with a tyrosine based endocytic motif within the C-terminus. P2X4 receptors remained stable within the proteolytic environment of the lysosome and resisted degradation by virtue of N-linked glycans. In macrophages, stimulation of phagocytosis triggered the trafficking of P2X4 receptors from lysosomes to the phagosome membrane. Trafficking of P2X4 receptors from lysosomes to the plasma membrane was triggered by a rise in intracellular calcium. Stimulation of lysosome exocytosis in peritoneal macrophages increased ATP-evoked P2X4 receptor currents across the plasma membrane. Taken together our data suggest that the P2X4 receptor retains its function within the degradative environment of the lysosome and can subsequently be mobilized to upregulate its exposure at the cell surface and phagosome.