The pleckstrin homology (PH) domain of phosphatidylinositol-specific phospholipase C-delta1 (PLC-delta1) binds to both D-myo-inositol 1,4, 5-trisphosphate (Ins(1,4,5)P3) and phosphatidylinositol 4, 5-bisphosphate (PtdIns(4,5)P2) with high affinities. We have previously identified a region rich in basic amino acids within the PH domain critical for ligand binding (Yagisawa, H., Hirata, M., Kanematsu, T., Watanabe, Y., Ozaki, S., Sakuma, K., Tanaka, H., Yabuta, N., Kamata, H., Hirata, H., and Nojima, H. (1994) J. Biol. Chem. 269, 20179-20188; Hirata, M., Kanematsu, T., Sakuma, K., Koga, T., Watanabe, Y., Ozaki, S., and Yagisawa, H. (1994) Biochem. Biophys. Res. Commun. 205, 1563-1571). To investigate the role of these basic residues, we have performed site-directed mutagenesis replacing each of the basic amino acid in the N-terminal 60 residues of PLC-delta1 (Lys24, Lys30, Lys32, Arg37, Arg38, Arg40, Lys43, Lys49, Arg56, Lys57, and Arg60) with a neutral or an acidic amino acid. The effects of these mutations on the PH domain ligand binding properties and their consequence for substrate hydrolysis and membrane interactions of PLC-delta1 were analyzed using several assay systems. Analysis of [3H]-Ins(1,4,5)P3 binding, measurement of the binding affinities, and measurements of phospholipase activity using PtdIns(4,5)P2-containing phospholipid vesicles, demonstrated that residues Lys30, Lys32, Arg37, Arg38, Arg40, and Lys57 were required for these PLC-delta1 functions; in comparison, other mutations resulted in a moderate reduction. A subset of selected mutations was further analyzed for the enzyme activity toward substrate present in cellular membranes of permeabilized cells and for interaction with the plasma membrane after microinjection. These experiments demonstrated that mutations affecting ligand binding and PtdIns(4,5)P2 hydrolysis in phospholipid vesicles also resulted in reduction in the hydrolysis of cellular polyphosphoinositides and loss of membrane attachment. All residues (with the exception of the K43E substitution) found to be critical for the analyzed PLC-delta1 functions are present at the surface of the PH domain shown to contain the Ins(1,4,5)P3 binding pocket.