It is increasingly recognized that the compartmental organization of signaling processes has a profound influence on cellular behavior. However, our inability to influence these compartmental events in a spatially restricted and acute manner limits our understanding of causation. To determine whether local compartmental loss of a phosphoinositide disrupts the normal traffic of specific cargoes through endosomes, we developed the use of a regulated dimerization device, here designed to compartmentally modify the phosphoinositide content of Rab5-positive endosomes. This modification is effected through the specific regulated recruitment of the 3-phosphatase myotubularin to endosomal membranes in intact cells. The selective manipulation of endosomal phosphatidylinositols (PIs) demonstrates that it is the phosphatidylinositol 3-phosphate (PtdIns3P) or its metabolite PtdIns(3,5)P2 within this compartment that determines the normal maturation of the endosomal compartment and the flux of receptors through it. On local loss of PtdIns3P/PtdIns(3,5)P2, the endosomal compartment itself fails to continue its normal maturation process, leading to the microtubule-dependent tubularization of the endosomal network. Furthermore, it is shown that endosomal PtdIns3P/PtdIns(3,5)P2 is necessary for transferrin receptor traffic through this compartment while having an effect on EGF receptor (EGFR) entry into and sorting from this endosome compartment. The ability to acutely and selectively influence compartmental behavior as exemplified here for endomsomes clearly illustrates the power of the approach used to dissect the role of localized signals and events.