Phosphatidylinositol 3,4,5-trisphosphate (PI(3,4,5)P3) has been proposed to act as a second messenger to recruit regulatory proteins to the plasma membrane via their pleckstrin homology (PH) domains. The PH domain of Bruton's tyrosine kinase (Btk), which is mutated in the human disease X-linked agammaglobulinemia, has been shown to interact with PI(3,4,5)P3 in vitro. In this study, a fusion protein containing the PH domain of Btk and the enhanced green fluorescent protein (BtkPH-GFP) was constructed and utilized to study the ability of this PH domain to interact with membrane inositol phospholipids inside living cells. The localization of expressed BtkPH-GFP in quiescent NIH 3T3 cells was indistinguishable from that of GFP alone, both being cytosolic as assessed by confocal microscopy. In NIH 3T3 cells coexpressing BtkPH-GFP and the epidermal growth factor receptor, activation of epidermal growth factor or endogenous platelet-derived growth factor receptors caused a rapid (<3 min) translocation of the cytosolic fluorescence to ruffle-like membrane structures. This response was not observed in cells expressing GFP only and was completely inhibited by treatment with the PI 3-kinase inhibitors wortmannin and LY 292004. Membrane-targeted PI 3-kinase also caused membrane localization of BtkPH-GFP that was slowly reversed by wortmannin. When the R28C mutation of the Btk PH domain, which causes X-linked agammaglobulinemia, was introduced into the fluorescent construct, no translocation was observed after stimulation. In contrast, the E41K mutation, which confers transforming activity to native Btk, caused significant membrane localization of BtkPH-GFP with characteristics indicating its possible binding to PI(4,5)P2. This mutant, but not wild-type BtkPH-GFP, interfered with agonist-induced PI(4,5)P2 hydrolysis in COS-7 cells. These results show in intact cells that the PH domain of Btk binds selectively to 3-phosphorylated lipids after activation of PI 3-kinase enzymes and that losing such binding ability or specificity results in gross abnormalities in the function of the enzyme. Therefore, the interaction with PI(3,4,5)P3 is likely to be an important determinant of the physiological regulation of Btk and can be utilized to visualize the dynamics and spatiotemporal organization of changes in this phospholipid in living cells.