Although a large number of ion channels are now believed to be regulated by phosphoinositides, particularly phosphoinositide 4,5-bisphosphate (PIP2), the mechanisms involved in phosphoinositide regulation are unclear. For the TRP superfamily of ion channels, the role and mechanism of PIP2 modulation has been especially difficult to resolve. Outstanding questions include: is PIP2 the endogenous regulatory lipid; does PIP2 potentiate all TRPs or are some TRPs inhibited by PIP2; where does PIP2 interact with TRP channels; and is the mechanism of modulation conserved among disparate subfamilies? We first addressed whether the PIP2 sensor resides within the primary sequence of the channel itself, or, as recently proposed, within an accessory integral membrane protein called Pirt. Here we show that Pirt does not alter the phosphoinositide sensitivity of TRPV1 in HEK-293 cells, that there is no FRET between TRPV1 and Pirt, and that dissociated dorsal root ganglion neurons from Pirt knock-out mice have an apparent affinity for PIP2 indistinguishable from that of their wild-type littermates. We followed by focusing on the role of the C terminus of TRPV1 in sensing PIP2. Here, we show that the distal C-terminal region is not required for PIP2 regulation, as PIP2 activation remains intact in channels in which the distal C-terminal has been truncated. Furthermore, we used a novel in vitro binding assay to demonstrate that the proximal C-terminal region of TRPV1 is sufficient for PIP2 binding. Together, our data suggest that the proximal C-terminal region of TRPV1 can interact directly with PIP2 and may play a key role in PIP2 regulation of the channel.