The dynamins are 100 kDa GTPases involved in the scission of endocytic vesicles from the plasma membrane [1]. Dynamin-1 is present in solution as a tetramer [2], and undergoes further self-assembly following its recruitment to coated pits to form higher-order oligomers that resemble ‘collars' around the necks of nascent coated buds [1,3]. GTP hydrolysis by dynamin in these collars is thought to accompany the ‘pinching off' of endocytic vesicles [1,4]. Dynamin contains a pleckstrin homology (PH) domain that binds phosphoinositides [5,6], which in turn enhance both the GTPase activity [5,7,8] and self-assembly [9,10] of dynamin. We recently showed that the dynamin PH domain binds phosphoinositides only when it is oligomeric [6]. Here, we demonstrate that interactions between the dynamin PH domain and phosphoinositides are important for dynamin function in vivo. Full-length dynamin-1 containing mutations that abolish phosphoinositide binding by its PH domain was a dominant-negative inhibitor of receptor-mediated endocytosis. Mutated dynamin-1 with both a defective PH domain and impaired GTP binding and hydrolysis also inhibited receptor-mediated endocytosis. These findings suggest that the role of the PH domain in dynamin function differs from that seen for other PH domains. We propose that high-avidity binding to phosphoinositide-rich regions of the membrane by the multiple PH domains in a dynamin oligomer is critical for dynamin's ability to complete vesicle budding.