A number of signaling molecules contain small pleckstrin homology (PH) domains capable of binding phosphoinositides or proteins. Phospholipase C (PLC)-gamma1 has two putative PH domains, an NH(2)-terminal (PH(1)) and a split PH domain (nPH(2) and cPH(2)). We previously reported that the split PH domain of PLC-gamma1 binds to phosphatidylinositol 4-phosphate (PI(4)P) and phosphatidylinositol 4,5-bisphosphate (PI(4,5)P(2)) (Chang et al., 2002). To identify the amino acid residues responsible for binding with PI(4)P and PI(4,5)P(2), we used site-directed mutagenesis to replace each amino acid in the variable loop-1 (VL-1) region of the PLC-gamma1 nPH(2) domain with alanine (a neutral amino acid). The phosphoinositide-binding affinity of these mutant molecules was analyzed by Dot-blot assay followed by ECL detection. We found that two PLC-gamma1 nPH2 domain mutants, P500A and H503A, showed reduced affinities for phosphoinositide binding. Furthermore, these mutant PLC-gamma1 molecules showed reduced PI(4,5)P(2) hydrolysis. Using green fluorescent protein (GFP) fusion protein system, we showed that both PH(1) and nPH(2) domains are responsible for membrane-targeted translocation of PLC-gamma1 upon serum stimulation. Together, our data reveal that the amino acid residues Pro(500) and His(503) are critical for binding of PLC-gamma1 to one of its substrates, PI(4,5)P(2) in the membrane.