Endosomal trafficking is regulated by the recruitment of effector proteins to phosphatidylinositol 3-phosphate [PtdIns(3)P] on early endosomes. At the plasma membrane, phosphatidylinositol-(3,4)-bisphosphate [PtdIns(3,4)P2] binds the pleckstrin homology (PH) domain-containing proteins Akt and TAPP1. Type Iα inositol polyphosphate 4-phosphatase (4-phosphatase) dephosphorylates PtdIns(3,4)P2, forming PtdIns(3)P, but its subcellular localization is unknown. We report here in quiescent cells, the 4-phosphatase colocalized with early and recycling endosomes. On growth factor stimulation, 4-phosphatase endosomal localization persisted, but in addition the 4-phosphatase localized at the plasma membrane. Overexpression of the 4-phosphatase in serum-stimulated cells increased cellular PtdIns(3)P levels and prevented wortmannin-induced endosomal dilatation. Furthermore, mouse embryonic fibroblasts from homozygous Weeble mice, which have a mutation in the type I 4-phosphatase, exhibited dilated early endosomes. 4-Phosphatase translocation to the plasma membrane upon growth factor stimulation inhibited the recruitment of the TAPP1 PH domain. The 4-phosphatase contains C2 domains, which bound PtdIns(3,4)P2, and C2-domain-deletion mutants lost PtdIns(3,4)P2 4-phosphatase activity, did not localize to endosomes or inhibit TAPP1 PH domain membrane recruitment. The 4-phosphatase therefore both generates and terminates phosphoinositide 3-kinase signals at distinct subcellular locations.