Human immunodeficiency virus type 1 (HIV-1) particle assembly mediated by the viral structural protein Gag occurs predominantly on the plasma membrane (PM). Although it is known that the matrix (MA) domain of Gag plays a major role in PM localization, molecular mechanisms that determine the location of assembly remain to be elucidated. We observed previously that overexpression of polyphosphoinositide 5-phosphatase IV (5ptaseIV) that depletes PM phosphatidylinositol-(4,5)-bisphosphate [PI(4,5)P-2] impairs virus particle production and redirects processed Gag to intracellular compartments. In this study, we examined the impact of PI(4,5)P-2 depletion on the subcellular localization of the entire Gag population using Gag-fluorescent protein chimeras. Upon 5ptaseIV overexpression, in addition to perinuclear localization, Gag also showed a hazy cytosolic signal, suggesting that PI(4,5)P-2 depletion impairs Gag membrane binding. Indeed, Gag was less membrane bound in PI(4,5)P-2-depleted cells, as assessed by biochemical analysis. These observations are consistent with the hypothesis that Gag interacts with PI(4,5)P2. To examine a putative Gag interaction with PI(4,5)P-2, we developed an in vitro binding assay using full-length myristoylated Gag and liposome-associated PI(4,5)P-2. Using this assay, we observed that PI(4,5)P-2 significantly enhances liposome binding of wild-type Gag. In contrast, a Gag derivative lacking MA did not require PI(4,5)P-2 for efficient liposome binding. To analyze the involvement of MA in PI(4,5)P-2 binding further, we examined MA basic amino acid substitution mutants. These mutants, previously shown to localize in perinuclear compartments, bound PI(4,5)P-2-containing liposomes weakly. Altogether, these results indicate that HIV-1 Gag binds PI(4,5)P-2 on the membrane and that the MA basic domain mediates this interaction.