CAPS-1 is required for Ca2+-triggered fusion of dense-core vesicles with the plasma membrane, but its site of action and mechanism are unknown. We analyzed the kinetics of Ca2+-triggered exocytosis reconstituted in permeable PC12 cells. CAPS-1 increased the initial rate of Ca2+-triggered vesicle exocytosis by acting at a rate-limiting, Ca2+-dependent prefusion step. CAPS-1 activity depended upon prior ATP-dependent priming during which PIP2 synthesis occurs. CAPS-1 activity and binding to the plasma membrane depended upon PIP2. Ca2+ was ineffective in triggering vesicle fusion in the absence of CAPS-1 but instead promoted desensitization to CAPS-1 resulting from decreased plasma membrane PIP2. We conclude that CAPS-1 functions following ATP-dependent priming as a PIP2 binding protein to enhance Ca2+-dependent DCV exocytosis. Essential prefusion steps in dense-core vesicle exocytosis involve sequential ATP-dependent synthesis of PIP2 and the subsequent PIP2-dependent action of CAPS-1. Regulation of PIP2 levels and CAPS-1 activity would control the secretion of neuropeptides and monoaminergic transmitters.