Phosphoinositides regulate several actin-binding proteins but their role at intercellular adhesions has not been defined. We found that phosphatidylinositol 4,5-bisphosphate (PI(4,5)P2) was generated at sites of N-cadherin-mediated intercellular adhesion and was a critical regulator of intercellular adhesion strength. Immunostaining for PI(4,5)P2 or transfection with GFP-PH-PLCdelta showed that PI(4,5)P2 was enriched at sites of N-cadherin adhesions and this enrichment required activated Rac1. Isoform-specific immunostaining for type I phosphatidylinositol 4-phosphate 5 kinase (PIP5KI) showed that PIP5KIgamma was spatially associated with N-cadherin-Fc beads. Association of PIP5KIgamma with N-cadherin adhesions was in part dependent on the activation of RhoA. Transfection with catalytically inactive PIP5KIgamma blocked the enrichment of PI(4,5)P2 around beads. Catalytically inactive PIP5KIgamma or a cell-permeant peptide that mimics and competes for the PI(4,5)P2-binding region of the actin-binding protein gelsolin inhibited incorporation of actin monomers in response to N-cadherin ligation and reduced intercellular adhesion strength by more than twofold. Gelsolin null fibroblasts transfected with a gelsolin severing mutant containing an intact PI(4,5)P2 binding region, demonstrated intercellular adhesion strength similar to wild-type transfected controls. We conclude that PIP5KIgamma-mediated generation of PI(4,5)P2 at sites of N-cadherin contacts regulates intercellular adhesion strength, an effect due in part to PI(4,5)P2-mediated regulation of gelsolin.