Gelsolin is an actin filament-severing and -capping protein which is inhibited by polyphosphoinositides (PPI). Severing requires gelsolin binding to the side of the filaments through a site in segments 2 and 3 (S2-3) to position another site in segment 1 (S1) to sever filaments. In this paper, we report that S2-3, like S1, caps actin filaments. Since neither S1 and S2-3 caps as well as gelsolin, and neither severs actin filament, S2-3 may actively contribute to severing by capping filaments cooperatively with S1. We used deletional mutagenesis to locate the S2-3 sequence required for actin filament side binding, capping, and PPI binding and found that these sites are located close to the NH2 terminus of S2 (residues 161-172). S3, a segment which has no known function up to now and does not by itself bind actin, contributes to stable capping and may contain an additional PPI-binding site.