Inositol phospholipids are a focus of renewed interest with the discovery of their unanticipated pivotal roles in membrane trafficking events. Reversible phosphorylation of phosphatidylinositol generates spatially localized signals on membranes that recruit or activate proteins essential for cell membrane budding, fission and fusion. Recent advances have taken place in the characterization of lipid kinases and phosphoinositide-regulated effector proteins, and in the elucidation of phospholipase D mediated mechanisms involving ADP ribosylation factor and Rho family proteins. The roles played by phosphoinositides in aspects of secretory granule formation, fusion and endocytosis indicate the importance of phosphorylated lipids for neurotransmitter release.