Phosphoinositide plays a critical role not only in generating second messengers, such as inositol 1,4,5-trisphosphate and diacylglycerol, but also in modulating a variety of cellular functions including cytoskeletal organization and membrane trafficking. Many inositol lipid kinases and phosphatases appear to regulate the concentration of a variety of phosphoinositides in a specific area, thereby inducing spatial and temporal changes in their availability. For example, local concentration changes in phosphatidytinositol 4,5-bisphosphate (PI(4,5)P-2) in response to extracellular stimuli cause the reorganization of actin filaments and a change in cell shape. PI(4,5)P-2 uncaps the barbed end of actin filaments and increases actin nucleation by modulating a variety of actin regulatory proteins, leading to de novo actin polymerization. PI(4,5)P-2 also plays a key role in membrane trafficking processes. In endocytosis, PI(4,5)P-2, targets clathrin-associated proteins to endocytic vesicles, leading to clathrin-coated pit formation. On the contrary, PI(4,5)P-2 must be dephosphorylated when they shed clathrin coats to fuse endosome. Thus, through regulating actin cytoskeleton organization and membrane trafficking, phosphoinositides play crucial roles in a variety of cell functions such as growth, polarity, movement, and pattern formation. (C) 2001 Elsevier Science B.V. All rights reserved.