Legionella pneumophila is an opportunistic intracellular pathogen that causes sporadic and epidemic cases of Legionnaires' disease. Emerging data suggest that Legionella infection involves the subversion of host phosphoinositide (PI) metabolism. However, how this bacterium actively manipulates PI lipids to benefit its infection is still an enigma. Here, we report that the L. pneumophila virulence factor SidF is a phosphatidylinositol polyphosphate 3-phosphatase that specifically hydrolyzes the D3 phosphate of PI(3,4)P(2) and PI(3,4,5)P(3). This activity is necessary for anchoring of PI(4)P-binding effectors to bacterial phagosomes. Crystal structures of SidF and its complex with its substrate PI(3,4)P(2) reveal striking conformational rearrangement of residues at the catalytic site to form a cationic pocket that specifically accommodates the D4 phosphate group of the substrate. Thus, our findings unveil a unique Legionella PI phosphatase essential for the establishment of lipid identity of bacterial phagosomes.