Sorting of endocytic ligands and receptors is critical for diverse cellular processes. The physiological significance of endosomal sorting proteins in vertebrates, however, remains largely unknown. Here we report that sorting nexin 3 (Snx3) facilitates the recycling of transferrin receptor (Tfrc) and thus is required for the proper delivery of iron to erythroid progenitors. Snx3 is highly expressed in vertebrate hematopoietic tissues. Silencing of Snx3 results in anemia and hemoglobin defects in vertebrates due to impaired transferrin (Tf)-mediated iron uptake and its accumulation in early endosomes. This impaired iron assimilation can be complemented with non-Tf iron chelates. We show that Snx3 and Vps35, a component of the retromer, interact with Tfrc to sort it to the recycling endosomes. Our findings uncover a role of Snx3 in regulating Tfrc recycling, iron homeostasis, and erythropoiesis. Thus, the identification of Snx3 provides a genetic tool for exploring erythropoiesis and disorders of iron metabolism.