Inositol phospholipids play multiple roles in cell signalling systems. Two widespread eukaryotic phosphoinositide-based signal transduction mechanisms, phosphoinositidase C-catalysed phosphatidylinositol-4,5-bisphosphate (PtdIns(4,5)P-2) hydrolysis and 3-OH kinase-catalysed PtdIns(4,5)P-2 phosphorylation, make the second messengers inositol 1,4,5-trisphosphate (Ins(1,4,5)P-3) sn-1,2-diacylglycerol and PtdIns(3,4,5)P-3 (refs 1-7). In addition, PtdIns(4,5)P-2 and PtdIns3P have been implicated in exocytosis and membrane trafficking(8). We now show that when the yeasts Saccharomyces cerevisiae and Schizosaccharomyces pombe are hyperosmotically stressed, they rapidly synthesize phosphatidylinositol-3,5-bisphosphate (PtdIns(3,5)P-2) by a process that involves activation of a PtdIns3P 5-OH kinase. This PtdIns(3,5)P-2 accumulation only occurs in yeasts that have an active vps34-encoded PtdIns 3-OH kinase, showing that this latter kinase makes the PtdIns3P needed for PtdIns(3,5)P-2 synthesis and indicating that PtdIns(3,5)P-2 may have a role in sorting vesicular proteins. PtdIns(3,5)P-2 is also present in mammalian and plant cells : in monkey Cos-7 cells, its labelling is inversely related to the external osmotic pressure. The stimulation of a PtdIns3P 5-OH kinase-catalysed synthesis of PtdIns(3,5)P-2, a molecule that might be a new type of phosphoinositide ’second messenger’, thus appears to be central to a widespread and previously uncharacterized regulatory pathway.