Mechanisms controlling the disassembly of ezrin/radixin/moesin (ERM) proteins, which link the cytoskeleton to the plasma membrane, are incompletely understood. In lymphocytes, chemokine (e.g., SDF-1) stimulation inactivates ERM proteins, causing their release from the plasma membrane and dephosphorylation. SDF-1-mediated inactivation of ERM proteins is blocked by phospholipase C (PLC) inhibitors. Conversely, reduction of phosphatidylinositol 4,5-bisphosphate (PIP2) levels by activation of PLC, expression of active PLC mutants, or acute targeting of phosphoinositide 5-phosphatase to the plasma membrane promotes release and dephosphorylation of moesin and ezrin. Although expression of phosphomimetic moesin (T558D) or ezrin (T567D) mutants enhances membrane association, activation of PLC still relocalizes them to the cytosol. Similarly, in vitro binding of ERM proteins to the cytoplasmic tail of CD44 is also dependent on PIP2. These results demonstrate a new role of PLCs in rapid cytoskeletal remodeling and an additional key role of PIP2 in ERM protein biology, namely hydrolysis-mediated ERM inactivation.