We recently modeled transient receptor potential (TRP) channels using the Gestalt Domain Detection Algorithm-Basic Local Alignment Tool (GDDA-BLAST), which derives structural, functional, and evolutionary information from primary amino acid sequences using phylogenetic profiles ( Ko, K. D., Hong, Y., Chang, G. S., Bhardwaj, G., van Rossum, D. B., and Patterson, R. L. (2008) Physics Arch. Quant. Methods arXiv: 0806.2394v1 ). Herein we test our functional predictions for the TRP_2 domain of TRPC3; a domain of unknown function that is conserved in all TRPC channels. Our functional models of this domain identify both lipid binding and trafficking activities. In this study, we reveal: (i) a novel structural determinant of ion channel sensitivity to lipids, (ii) a molecular mechanism for the difference between diacylglycerol (DAG)-sensitive and DAG-insensitive TRPC subfamilies, and (iii) evidence that TRPC3 can comprise part of the vesicle fusion machinery. Indeed, the TRPC3 TRP_2 domain mediates channel trafficking to the plasma membrane and binds to plasma membrane lipids. Further, mutations in TRP_2, which alter lipid binding, also disrupt the DAG-mediated fusion of TRPC3-containing vesicles with the plasma membrane without disrupting SNARE interactions. Importantly, these data agree with the known role of DAG in membrane destabilization, which facilitates SNARE-dependent synaptic vesicle fusion ( Villar, A. V., Goni, F. M., and Alonso, A. (2001) FEBS Lett. 494, 117-120 and Goni, F. M., and Alonso, A. (1999) Prog. Lipid Res. 38, 1-48 ). Taken together, functional models generated by GDDA-BLAST provide a computational platform for deriving domain functionality, which can have in vivo and mechanistic relevance.