We have previously reported that the epithelial cell-specific actin-binding protein villin directly associates with phosphatidylinositol 4,5-bisphosphate (PIP(2)) through three binding sites that overlap with actin-binding sites in villin. As a result, association of villin with PIP(2) inhibits actin depolymerization and enhances actin cross-linking by villin. In this study, we demonstrate that these three PIP(2)-binding sites also bind the more hydrophilic phospholipid, lysophosphatidic acid (LPA) but with a higher affinity than PIP(2) (dissociation constant (K(d)) of 22 mum versus 39.5 mum for PIP(2)). More interestingly, unlike PIP(2), the association of villin with LPA inhibits all actin regulatory functions of villin. In addition, unlike PIP(2), LPA dramatically stimulates the tyrosine phosphorylation of villin by c-Src kinase. These studies suggest that in cells, selective interaction of villin with either PIP(2) or LPA could have dramatically different outcomes on actin reorganization as well as phospholipid-regulated cell signaling. These studies provide a novel regulatory mechanism for phospholipid-induced changes in the microfilament structure and cell function and suggest that LPA could be an intracellular regulator of the actin cytoskeleton.