Drosophila Kinesin-73 (Khc-73), which plays a role in mitotic spindle polarity in neuroblasts, is a metazoan-specific member of the Kinesin-3 family of motors, which includes mammalian KIF1A and Caenorhabditis elegans Unc-104. The mechanism of Kinesin-3 motors has been controversial because some studies have reported that they transport cargo as monomers whereas other studies have suggested a dimer mechanism. Here, we have performed single-molecule motility and cell biological studies of Khc-73. We find that constructs containing the motor and the conserved short stretches of putative coiled-coil-forming regions are predominantly monomeric in vitro, but that dimerization allows for fast, processive movement and high force production (7 piconewtons). In Drosophila cell lines, we present evidence that Khc-73 can dimerize in vivo. We also show that Khc-73 is recruited specifically to Rab5-containing endosomes through its "tail" domain. Our results suggest that the N-terminal half of Khc-73 can undergo a monomer-dimer transition to produce a fast processive motor and that its C-terminal half possesses a specific Rab5-vesicle binding domain.