Disabled-1 (Dab1) is an essential adaptor protein that functions in the Reelin signaling pathway and is required for the regulation of neuronal migration during embryonic development. Dab1 interacts with NPXY motifs in the cytoplasmic tails of the lipoprotein receptors ApoER2 and very low density lipoprotein receptor through an amino-terminal phosphotyrosine binding (PTB) domain. Binding of Reelin to these receptors leads to tyrosine phosphorylation of Dab1 and the initiation of a signaling cascade that results in remodeling of the cytoskeleton. Structural and biochemical studies of the Dab1 PTB domain have demonstrated that this domain binds to both the NPXY peptide motif in the lipoprotein receptor tails as well as to the head group of phosphoinositide 4,5-P2 through energetically independent mechanisms. Here we have investigated how phosphoinositide binding by the Dab1 PTB domain influences Reelin signal transduction. Our findings in cultured primary neurons that have been transduced with lentiviral constructs expressing mutant Dab1 forms reveal that phosphoinositide binding by the Dab1 PTB domain is necessary for proper membrane localization of Dab1 and for effective transduction of a Reelin signal.