PtdIns(3,5)P(2) is one of the seven regulatory PPIn (polyphosphoinositides) that are ubiquitous in eukaryotes. It controls membrane trafficking at multiple points in the endosomal/lysosomal system and consequently regulates the size, shape and acidity of at least one endo-lysosomal compartment. PtdIns(3,5)P(2) appears to exert this control via multiple effector proteins, with each effector specific for a subset of the various PtdIns(3,5)P(2)-dependent processes. Some putative PtdIns(3,5)P(2) effectors have been identified, including Atg18p-related PROPPIN [beta-propeller(s) that bind PPIn] proteins and the epsin-like proteins Ent3p and Ent5p, whereas others remain to be defined. One of the principal functions of PtdIns(3,5)P(2) is to regulate the fission/fragmentation of endo-lysosomal sub-compartments. PtdIns(3,5)P(2) is required for vesicle formation during protein trafficking between endo-lysosomes and also for fragmentation of endo-lysosomes into smaller compartments. In yeast, hyperosmotic stress accelerates the latter process. In the present review we highlight and discuss recent studies that reveal the role of the HOPS-CORVET complex and the vacuolar H(+)-ATPase in the process of endo-lysosome fission, and speculate on connections between these machineries and the Fab1p pathway. We also discuss new evidence linking PtdIns(3,5)P(2) and PtdIns5P to the regulation of exocytosis.