Phosphatidylinositol 4,5-bisphosphate [PtdIns(4, 5)P-2] has been known to bind to the pleckstrin homology domain and the phosphotyrosine-binding domain as well as actin-binding proteins, and to regulate their functions. We have tried to find new PtdIns(4,5)P-2-binding proteins and to clarify the physiological effects of PtdIns(4,5)P-2 on their function. We report here that histones H1 and H3 are PtdIns(4,5)P-2-binding proteins which were identified using antibodies specific to PtdIns(4,5)P-2, H1, and H3. This binding was further confirmed by extracting PtdIns(4,5)P-2 from purified histone H1 and H3. Furthermore, the binding site of PtdIns(4,5)P-2 in histone H1 was found in the carboxyl-terminal 103 amino acids. It was also shown that the amounts of PtdIns(4,5)P-2 bound to H1 decrease when histone H1 is phosphorylated by protein kinase C but not by protein kinase A or cdc2 kinase, in vitro. The protein kinase C phosphorylation site is localized close to the PtdIns(4,5)P-2-binding site, suggesting that phosphorylation of histone H1 by protein kinase C interferes stereostructually with PtdIns(4,5)P-2 binding. We further noticed that PtdIns(4,5)P-2 binding to H1 counteracts the histone H1-mediated repression of basal transcription by RNA polymerase II in a Drosophila transcription system in vitro. Phosphatidylinositol 4-phosphate and phosphatidylinositol 3,4,5 trisphosphate affect this transcription activity more weakly than PtdIns(4,5)P-2 but PtdIns and other acidic lipids have no effect on this activity. These data indicate that PtdIns(4,5)P-2 bound to nuclear protein histone H1 may contribute to the regulation of transcription in eukaryotic cells.