Edited by Alex TokerSpatial and temporal control of actin polymerization is fundamental for many cellular processes, including cell migration, division, vesicle trafficking, and response to agonists. Many actin-regulatory proteins interact with phosphatidylinositol 4,5-bisphosphate (PI(4,5)P 2 ) and are either activated or inactivated by local PI(4,5)P 2 concentrations that form transiently at the cytoplasmic face of cell membranes. The molecular mechanisms of these interactions and how the dozens of PI(4,5)P 2sensitive actin-binding proteins are selectively recruited to membrane PI(4,5)P 2 pools remains undefined. Using a combination of biochemical, imaging, and cell biologic studies, combined with molecular dynamics and analytical theory, we test the hypothesis that the lateral distribution of PI(4,5)P 2 within lipid membranes and native plasma membranes alters the capacity of PI(4,5)P 2 to nucleate actin assembly in brain and neutrophil extracts and show that activities of formins and the Arp2/3 complex respond to PI(4,5)P 2 lateral distribution. Simulations and analytical theory show that cholesterol promotes the cooperative interaction of formins with multiple PI(4,5)P 2 headgroups in the membrane to initiate actin nucleation. Masking PI(4,5)P 2 with neomycin or disrupting PI(4,5)P 2 domains in the plasma membrane by removing cholesterol decreases the ability of these membranes to nucleate actin assembly in cytoplasmic extracts.