After opening in response to mechanical stimuli, hair cell transduction channels adapt with fast and slow mechanisms that each depend on Ca(2+). We demonstrate here that transduction and adaptation require phosphatidylinositol 4,5-bisphosphate (PIP(2)) for normal kinetics. PIP(2) has a striking distribution in hair cells, being excluded from the basal region of hair bundles and apical surfaces of frog saccular hair cells. Localization of a phosphatidylinositol lipid phosphatase, Ptprq, to these PIP(2)-free domains suggests that Ptprq maintains low PIP(2) levels there. Depletion of PIP(2) by inhibition of phosphatidylinositol 4-kinase or sequestration by aminoglycosides reduces the rates of fast and slow adaptation. PIP(2) and other anionic phospholipids bind directly to the IQ domains of myosin-1c, the motor that mediates slow adaptation, permitting a strong interaction with membranes and likely regulating the motor's activity. PIP(2) depletion also causes a loss in transduction current. PIP(2) therefore plays an essential role in hair cell adaptation and transduction.