Erythrocyte protein 4.1R is a multifunctional protein that binds to various membrane proteins and to phosphatidylserine. In the present study, we report two important observations concerning 4.1R-phosphatidylserine interaction. Biochemically, a major finding of the present study is that 4.1R binding to phosphatidylserine appears to be a two-step process in which 4.1R first interacts with serine head group of phosphatidylserine through the positively charged amino acids YKRS and subsequently forms a tight hydrophobic interaction with fatty acid moieties. 4.1R failed to dissociate from phosphatidylserine liposomes under high ionic strength but could be released specifically by phospholipase A(2) but not by phospholipase C or D. Biochemical analyses showed that acyl chains were associated with 4.1R released by phospholipase A(2). Importantly, the association of acyl chains with 4.1R impaired its ability to interact with calmodulin, band 3, and glycophorin C. Removal of acyl chains restored 4.1R binding. These data indicate that acyl chains of phosphatidylserine play an important role in its interaction with 4.1R and on 4.1R function. In terms of biological significance, we have obtained evidence that 4.1R-phosphatidylserine interaction may play an important role in cellular sorting of 4.1R.