Focal adhesion kinase (FAK) is an essential kinase that regulates developmental processes and functions in the pathology of human disease. An intramolecular autoinhibitory interaction between the FERM and catalytic domains is a major mechanism of regulation. Based upon structural studies, a fluorescence resonance energy transfer (FRET)-based FAK biosensor that discriminates between autoinhibited and active conformations of the kinase was developed. This biosensor was used to probe FAK conformational change in live cells and the mechanism of regulation. The biosensor demonstrates directly that FAK undergoes conformational change in vivo in response to activating stimuli. A conserved FERM domain basic patch is required for this conformational change and for interaction with a novel ligand for FAK, acidic phospholipids. Binding to phosphatidylinositol 4,5-bisphosphate (PIP2)-containing phospholipid vesicles activated and induced conformational change in FAK in vitro, and alteration of PIP2 levels in vivo changed the level of activation of the conformational biosensor. These findings provide direct evidence of conformational regulation of FAK in living cells and novel insight into the mechanism regulating FAK conformation.