Appropriate regulation of signal transduction pathways is essential for normal development and is often disrupted in disease. Therefore, many regulatory mechanisms and feedback loops have evolved to ensure appropriate signalling. One mechanism previously suggested to modulate a range of signal transduction pathways involves the internalisation and destruction of transmembrane receptors by the endocytic trafficking machinery. Strikingly, a recent report has suggested that the endocytic trafficking of the Drosophila JAK–STAT pathway receptor Domeless (Dome) does not act to downregulate pathway activity, but rather is necessary for in vivo signalling. Here, we examine this relationship to address the interaction of Drosophila JAK–STAT pathway signalling and endocytic trafficking. We show that Dome is trafficked through clathrin-mediated endocytosis and a directed RNAi screen identified several components of the endocytic machinery as negative regulators of pathway signalling. We demonstrate that Dome signals both from the plasma membrane and internalised vesicles and show, using knockdown experiments, that endocytic components negatively regulate JAK–STAT signalling in vivo. As such, disruption in endocytic trafficking represents a potent negative regulator of the disease relevant JAK–STAT signalling cascade.