Component of the ESCRT-II complex (endosomal sorting complex required for transport II), which is required for multivesicular body (MVB) formation and sorting of endosomal cargo proteins into MVBs. The MVB pathway mediates delivery of transmembrane proteins into the lumen of the lysosome for degradation. The ESCRT-II complex is probably involved in the recruitment of the ESCRT-III complex (By similarity). Seems to function as a tumor suppressor by regulating Notch trafficking, hence preventing non-autonomous overproliferation. May be involved in the regulation of autophagy. ESCRT-II interacts with bicoid mRNA, which is required for the anterior localization of bicoid mRNA in the developing egg. Component of the endosomal sorting complex required for transport II (ESCRT-II) (By similarity). Interacts with Lsn/Snf8/Vps22 (Probable). Vps25 mutant cells exhibit multivesicular body sorting defects, with large amounts of ubiquitinated proteins detected on endosomes. This leads to activation of signals (through Notch and Dpp receptors) that drive cell proliferation, non-autonomous overgrowth, loss of epithelial organization, and render cells sensitive to apoptosis. Vps25 mutant cells display accumulation of autophagosomes. Bicoid mRNA is mislocalized in developing eggs. Belongs to the VPS25 family.