Phosphatidylinositol-4,5-bisphosphate plays a pivotal role in the regulation of cell proliferation and survival, cytoskeletal reorganization, and membrane trafficking. However, little is known about the temporal and spatial regulation of its synthesis. Higher eukaryotic cells have the potential to use two distinct pathways for the generation of phosphatidylinositol-4,5-bisphosphate. These pathways require two classes of phosphatidylinositol phosphate kinases, termed type I and type II PIP kinases. While highly related by sequence, these kinases localize to different subcellular compartments, phosphorylate distinct substrates, and are functionally nonredundant. Here, we show that a 20- to 25-amino acid loop spanning the catalytic site, termed the activation loop, determines both enzymatic specificity and subcellular targeting of PIP kinases. Therefore, the activation loop controls signaling specificity and PIP kinase function at multiple levels.