Phosphatidylinositol 4,5-bisphosphate (PtdIns 4,5-P2) is a membrane phospholipid found in all eukaryotic cells which regulates many important cellular processes, including organization of the cytoskeleton, vesicular trafficking and platelet activation. PtdIns 4,5-P2 can either act as a substrate for lipid kinases and phosphatases, or directly interact with proteins. Recent work has focused on the characterization of the enzymes that regulate PtdIns 4,5-P2 levels in the cell. The discovery of proteins whose activities are modified by interaction with PtdIns 4,5-P2 has helped to redefine the role of this lipid in cell biology.