The voltage-gated potassium channel KV7.1 is regulated by non-pore forming regulatory KCNE β-subunits. Together with KCNE1, it forms the slowly activating delayed rectifier potassium current IKs. However, where the subunits assemble and which of the subunits determines localization of the IKs-complex has not been unequivocally resolved yet. We employed trafficking-deficient KV7.1 and KCNE1 mutants to investigate IKs trafficking using the polarized Madin-Darby Canine Kidney cell line. We find that the assembly happens early in the secretory pathway but provide three lines of evidence that it takes place in a post-endoplasmic reticulum compartment. We demonstrate that KV7.1 targets the IKs-complex to the basolateral membrane, but that KCNE1 can redirect the complex to the apical membrane upon mutation of critical KV7.1 basolateral targeting signals. Our data provide a possible explanation to the fact that KV7.1 can be localized apically or basolaterally in different epithelial tissues and offer a solution to divergent literature results regarding the effect of KCNE subunits on the subcellular localization of KV7.1/KCNE complexes.