Phosphatidylinositol 3,5-bisphosphate is a membrane lipid found in all eukaryotes so far studied but downstream effector proteins of this lipid have yet to be identified. Here we report the use of cDNA phage libraries in conjunction with synthetic biotinylated derivatives of phosphatidylinositol 3,5-bisphosphate in the identification of a mammalian phosphatidylinositol 3,5-bisphosphate-binding protein, mVps24p. This protein is orthologous to the Saccharomyces cerevisiae protein, Vps24p, a class-E vacuolar protein-sorting protein. Using in vitro liposome binding and competition assays, we demonstrate that mVps24p selectively binds to phosphatidylinositol 3,5-bisphosphate and phosphatidylinositol 3,4-bisphosphate in preference to other phosphoinositides tested. When expressed in cultured mammalian cells, full-length mVps24p is cytosolic. However, when cells expressing the full-length mVps24p are co-transfected with a mutated form of mVps4p (which is defective in ATP hydrolysis), or when a N-terminal construct of mVps24p is expressed, the class-E cellular phenotype with swollen vacuoles is induced and mVps24p is membrane-associated. Furthermore, the accumulation of the N-terminal mVps24p construct on the swollen endosomal membranes is abrogated when phosphatidylinositol 3,5-bisphosphate synthesis is blocked with wortmannin. These data provide the first direct link between phosphatidylinositol 3,5-bisphosphate and the protein machinery involved in the production of the class-E cellular phenotype. We hypothesize that accumulation of Vps24 on membranes occurs when membrane association (dependent on interaction of phosphatidylinositol 3,5-bisphosphate with the N-terminal domain of the protein) is uncoupled from membrane disassociation (driven by Vps4p).