The calcium-dependent activator protein for secretion (CAPS) is a novel neural/endocrine-specific cytosolic and peripheral membrane protein required for the Ca2+-regulated exocytosis of secretory vesicles, CAPS acts at a stage in exocytosis that follows ATP-dependent priming, which involves the essential synthesis of phosphatidylinositol 4,5-bisphosphate (PtdIns(4,5)P-2). In the present studies, CAPS is shown to bind liposomes that contain acidic phospholipids and binding was markedly enhanced by inclusion of PtdIns(4,5)P-2 but not other phosphoinositides in the absence of Ca2+. PtdIns(4,5)P-2, but not other phosphoinositides including PtdIns(3,4)P-2 and PtdIns(3,4,5)P-3, altered the susceptibility of CAPS to proteolysis by trypsin and proteinase K, suggesting that phosphoinositide binding promoted a conformational change, Photoaffinity labeling studies with a photoactivatable benzoylcinnimidyl acyl chain derivative of PtdIns(4,5)P-2 confirmed the phosphoinositide-binding properties of CAPS and suggested a hydrophobic aspect of the interaction, CAPS, as one of very few characterized proteins with a binding specificity for 4-,5-phosphorylated inositides over 3-phosphorylated inositides, may function in regulated exocytosis as an effector of PtdIns(4,5)P-2.