Chicken muscle CapZ, a member of the capping protein family of actin-binding proteins, binds to the barbed end of actin filaments and nucleates actin polymerization. No regulation of the capping protein family has been described. We report that micelles of phosphatidylinositol 4,5-bisphosphate (PIP2) bind to CapZ and completely inhibit its ability to affect actin polymerization as measured by several independent assays. Higher concentrations of other anionic phospholipids also completely inhibit the activity of CapZ. Neutral phospholipids have no effect. Mixed vesicles of PIP2 with phosphatidylcholine or phosphatidyl-ethanolamine also inhibit CapZ, but addition of Triton X-100 both prevents and reverses PIP2's inhibition of CapZ.