3'-Phosphoinositides are ubiquitous cellular lipids that play pivotal regulatory roles in health and disease. Generation of 3'-phosphoinositides are driven by three families of phosphoinositide 3-kinases (PI3K) but the mechanisms underlying their regulation and cross-talk are not fully understood. Among 3'-phosphoinositides, phosphatidylinositol-3,5-bisphosphate (PI(3,5)P 2 ) remains the least understood species in terms of its spatiotemporal dynamics and physiological function due to the lack of specific probes. By means of spatiotemporally resolved in situ quantitative imaging of PI(3,5)P 2 using a newly developed ratiometric PI(3,5)P 2 sensor we demonstrate that a special pool of PI(3,5)P 2 is generated on lysosomes and late endosomes in response to growth factor stimulation. This PI(3,5)P 2 pool, the formation of which is mediated by Class II PI3KC2β and PIKFyve, plays a crucial role in terminating the activity of growth factor-stimulated Class I PI3K, one of the most frequently mutated proteins in cancer, via specific interaction with its regulatory p85 subunit. Cancer-causing mutations of Class I PI3K inhibit the p85-PI(3,5)P 2 interaction and thereby induce sustained activation of Class I PI3K. Our results unravel a hitherto unknown tight regulatory interplay between Class I and II PI3Ks mediated by PI(3,5)P 2 , which may be important for controlling the strength of PI3K-mediated growth factor signaling. These results also suggest a new therapeutic possibility of treating cancer patients with p85 mutations.