The Rab7 GTPase regulates late endosome trafficking of the Epidermal Growth Factor Receptor (EGFR) to the lysosome for degradation. However, less is known about how Rab7 activity, functioning late in the endocytic pathway, affects EGFR signaling. Here we used Caenorhabditis elegans vulva cell fate induction, a paradigm for genetic analysis of EGFR/Receptor Tyrosine Kinase (RTK) signaling, to assess the genetic requirements for rab-7. Using a rab-7 deletion mutant, we demonstrate that rab-7 antagonizes LET-23 EGFR signaling to a similar extent, but in a distinct manner, as previously described negative regulators such as sli-1 c-Cbl. Epistasis analysis places rab-7 upstream of or in parallel to lin-3 EGF and let-23 EGFR. However, expression of gfp::rab-7 in the Vulva Presursor Cells (VPCs) is sufficient to rescue the rab-7(-) VPC induction phenotypes indicating that RAB-7 functions in the signal receiving cell. We show that components of the Endosomal Sorting Complex Required for Transport (ESCRT)-0, and -I, complexes, hgrs-1 Hrs, and vps-28, also antagonize signaling, suggesting that LET-23 EGFR likely transits through Multivesicular Bodies (MVBs) en route to the lysosome. Consistent with RAB-7 regulating LET-23 EGFR trafficking, rab-7 mutants have increased number of LET-23::GFP-positive endosomes. Our data imply that Rab7, by mediating EGFR trafficking and degradation, plays an important role in downregulation of EGFR signaling. Failure to downregulate EGFR signaling contributes to oncogenesis, and thus Rab7 could possess tumor suppressor activity in humans.