Palladin is a recently described phosphoprotein that plays an important role in cell adhesion and motility. Previous studies have shown that palladin overexpression results in profound changes in actin organization in cultured cells. Palladin binds to the actin-associated proteins alpha-actinin, vasodilator-stimulated phosphoprotein, profilin, Eps8, and ezrin, suggesting that it may affect actin organization indirectly. To determine its molecular function in generating actin arrays, we purified palladin and asked if it is also capable of binding to F-actin directly. In co-sedimentation and differential sedimentation assays, palladin was found to both bind and cross-link actin filaments. This bundling activity was confirmed by fluorescence and electron microscopy. Palladin fragments were then purified and used to determine the sequences necessary to bind and bundle F-actin. The Ig3 domain of palladin bound to F-actin, and a palladin fragment containing Ig3, Ig4, and the region linking these domains was identified as a fragment that was able to bundle F-actin. Because palladin has multiple Ig domains, and only one of them binds to F-actin, this suggests that different Ig domains may be specialized for distinct biological functions. In addition, our results suggest a potential role for palladin in generating specialized, actin-based cell morphologies via both direct actin cross-linking activity and indirect scaffolding activity.