Collagen phagocytosis is a critical mediator of extracellular matrix remodeling. Whereas the binding step of collagen phagocytosis is facilitated by Ca2+-dependent, gelsolin-mediated severing of actin filaments, the regulation of the collagen internalization step is not defined. We determined here whether phosphatidylinositol-4,5-bisphosphate [PI(4,5)P2] regulation of gelsolin is required for collagen internalization. In gelsolin null fibroblasts transfected with gelsolin severing mutants, actin severing and collagen binding were strongly impaired but internalization and actin monomer addition at collagen bead sites were much less affected. PI(4,5)P2 accumulated around collagen during internalization and was associated with gelsolin. Cell-permeable peptides mimicking the PI(4,5)P2 binding site of gelsolin blocked actin monomer addition, the association of gelsolin with actin at phagosomes, and collagen internalization but did not affect collagen binding. Collagen beads induced recruitment of type 1 gamma phosphatidylinositol phosphate kinase (PIPK1gamma661) to internalization sites. Dominant negative constructs and RNA interference demonstrated a requirement for catalytically active PIPK1gamma661 for collagen internalization. We conclude that separate functions of gelsolin mediate sequential stages of collagen phagocytosis: Ca2+-dependent actin severing facilitates collagen binding, whereas PI(4,5)P2-dependent regulation of gelsolin promotes the actin assembly required for internalization of collagen fibrils.