Phosphatidylinositol transfer protein alpha (PITPalpha) is a 32 kDa protein of 270 amino acids that is essential for phospholipase C-mediated phosphatidylinositol bisphosphate hydrolysis. In addition, it binds and transfers phosphatidylinositol and phosphatidylcholine between membrane compartments in vitro. Here we have used limited proteolysis of PITPalpha by subtilisin to identify the structural requirements for function. Digestion by subtilisin results in the generation of a number of slightly smaller peptide fragments, the major fragment being identified as a 29 kDa protein. The fragments were resolved by size-exclusion chromatography and were found to be totally inactive in both in vivo PLC reconstitution assays and in vitro phosphatidylinositol transfer assays. N-terminal sequencing and MS of the major 29 kDa fragment shows that cleavage occurs at the C-terminus of PITP at Met246, leading to a deletion of 24 amino acid residues. We conclude that the C-terminus plays an important role in mediating PLC signalling in vivo and lipid transfer in vitro, supporting the notion that lipid transfer may be a facet of PITP function in vivo.