Phospholipase D (PLD) generates lipid signals that coordinate membrane trafficking with cellular signaling. PLD activity in vitro and in vivo is dependent on phosphoinositides with a vicinal 4,5-phosphate pair. Yeast and mammalian PLDs contain an NH2-terminal pleckstrin homology (PH) domain that has been speculated to specify both subcellular localization and regulation of PLD activity through interaction with phosphatidylinositol 4,5-bisphosphate (PI[4,5]P2). We report that mutation of the PH domains of yeast and mammalian PLD enzymes generates catalytically active PI(4,5)P2-regulated enzymes with impaired biological functions. Disruption of the PH domain of mammalian PLD2 results in relocalization of the protein from the PI(4,5)P2-containing plasma membrane to endosomes. As a result of this mislocalization, mutations within the PH domain render the protein unresponsive to activation in vivo. Furthermore, the integrity of the PH domain is vital for yeast PLD function in both meiosis and secretion. Binding of PLD2 to model membranes is enhanced by acidic phospholipids. Studies with PLD2-derived peptides suggest that this binding involves a previously identified polybasic motif that mediates activation of the enzyme by PI(4,5)P2. By comparison, the PLD2 PH domain binds PI(4,5)P2 with lower affinity but sufficient selectivity to function in concert with the polybasic motif to target the protein to PI(4,5)P2-rich membranes. Phosphoinositides therefore have a dual role in PLD regulation: membrane targeting mediated by the PH domain and stimulation of catalysis mediated by the polybasic motif.