Cytosolic phospholipase A2 (cPLA2) plays a key role in the generation of arachidonic acid, a precursor of potent inflammatory mediators. Intact cPLA2 is known to translocate in a calcium-dependent manner from the cytosol to the nuclear envelope and endoplasmic reticulum. We show here that the C2 domain of cPLA2 alone is sufficient for this calcium-dependent translocation in living cells. We have identified sets of exposed hydrophobic residues in loops known as calcium-binding region (CBR) 1 and CBR3, which surround the C2 domain calcium-binding sites, whose mutation dramatically decreased phospholipid binding in vitro without significantly affecting calcium binding. Mutation of a residue that binds calcium ions (D43N) also eliminated phospholipid binding. The same mutations that prevent phospholipid binding of the isolated C2 domain in vitro abolished the calcium-dependent translocation of cPLA2 to internal membranes in vivo, suggesting that the membrane targeting is driven largely by direct interactions with the phospholipid bilayer. Using fluorescence quenching by spin-labeled phospholipids for a series of mutants containing a single tryptophan residue at various positions in the cPLA2 C2 domain, we show that two of the calcium-binding loops, CBR1 and CBR3, penetrate in a calcium-dependent manner into the hydrophobic core of the phospholipid bilayer, establishing an anchor for docking the domain onto the membrane.