Syndecan-4 is a transmembrane heparan sulfate proteoglycan that can regulate cell-matrix interactions and is enriched in focal adhesions. Its cytoplasmic domain contains a central region unlike that of any other vertebrate or invertebrate syndecan core protein with a cationic motif that binds inositol phospholipids. In turn, lipid binding stabilizes the syndecan in oligomeric form, with subsequent binding and activation of protein kinase C. The specificity of phospholipid binding and its potential regulation are investigated here. Highest affinity of the syndecan-4 cytoplasmic domain was seen with phosphatidylinositol 4,5-bisphosphate (PtdIns-(4,5P) 2 ) and phosphatidylinositol 4-phosphate, and both promoted syndecan-4 oligomerization. Affinity was much reduced for 3-phosphorylated inositides while no binding of diacylglycerol was detected. Syndecan-2 cytoplasmic domain had negligible affinity for any lipid examined. Inositol hexakisphosphate, but not inositol tetrakisphosphate, also had high affinity for the syndecan-4 cytoplasmic domain and could compete effectively with PtdIns(4,5)P 2 . Since inositol hexaphosphate binding to syndecan-4 does not promote oligomer formation, it is a potential down-regulator of syndecan-4 signaling. Similarly, phosphorylation of serine 183 in syndecan-4 cytoplasmic domain reduced PtdIns(4,5)P 2 binding affinity by over 100-fold, although interaction could still be detected by nuclear magnetic resonance spectroscopy. Only protein kinase C␣ was up-regulated in activity by the combination of syndecan-4 and PtdIns(4,5)P 2 , with all other isoforms tested showing minimal response. This is consistent with the codistribution of syndecan-4 with the ␣ isoform of protein kinase C in focal adhesions.Phosphatidylinositol 4,5-bisphosphate (PtdIns(4,5)P 2 ) 1 has multiple roles in cell signaling and the regulation of cell adhesion, morphology, and trafficking (1-4). It can be cleaved by phospholipases to generate diacylglycerol and inositol trisphosphate (InsP 3 ). These are second messengers that activate some serine/threonine kinases, including conventional and novel protein kinase C (PKC) isoforms (5, 6) and trigger calcium release from intracellular stores (6), respectively. InsP 3 can also be the target of kinases that sequentially convert it through InsP 4 and InsP 5 to InsP 6 (inositol hexaphosphate) that has been proposed to have various regulatory functions in phosphatase inhibition, trafficking, calcium influx, and cell growth (7-9). PtdIns(4,5)P 2 can also be converted to PtdIns(3,4,5)P 3 by PI 3-kinases that have also been implicated in regulation of protein trafficking, cell growth and survival, and cytoskeletal organization (10, 11). In addition, PtdIns(4,5)P 2 may have roles itself, such as binding and regulation of the actin-associated proteins vinculin, ␣-actinin, and gelsolin (2). Binding of PtdIns(4,5)P 2 to specific sites on these proteins influences their interactive properties with, for example, actin (12-14). Many proteins interact with this phospholipid through defined...