The Dot/Icm type IV secretion system (T4SS) of Legionella pneumophila is crucial for the pathogen to survive in protozoa and cause human disease. Although more than 275 effector proteins are delivered into the host cell by the T4SS, the function of the majority is unknown. Here we have characterized the Dot/Icm effector LtpD. During infection, LtpD localized to the cytoplasmic face of the membrane of the Legionella-containing vacuole (LCV). In A549 lung epithelial cells, ectopically expressed LtpD localized to large vesicular structures that contained markers of endosomal compartments. Systematic analysis of LtpD fragments identified an internal 17-kDa fragment, LtpD471-626, which was essential for targeting ectopically expressed LtpD to vesicular structures and for the association of translocated LtpD with the LCV. LtpD471-626 bound directly to phosphatidylinositol 3-phosphate [PtdIns(3)P] in vitro and colocalized with the PtdIns(3)P markers FYVE and SetA in cotransfected cells. LtpD was also found to bind the host cell enzyme inositol (myo)-1 (or 4)-monophosphatase 1, an important phosphatase involved in phosphoinositide production. Analysis of the role of LtpD in infection showed that LtpD is involved in bacterial replication in THP-1 macrophages, the larvae of Galleria mellonella, and mouse lungs. Together, these data suggest that LtpD is a novel phosphoinositide-binding L. pneumophila effector that has a role in intracellular bacterial replication.