IP4BP/Synaptotagmin II is an inositol-1,3,4,5-tetrakisphosphate (IP4) or inositol polyphosphate-binding protein, which is accumulated at nerve terminals. Here we report a novel function of the C2B domain, which was originally thought to be responsible for Ca(2+)-dependent binding to phospholipid membranes. A study of deletion mutants showed that about 30 amino acids of the central region of the C2B domain of mouse IP4BP/synaptotagmin II (315 IHLMQNGKRLKKKKTTVKKKTLNPYFNESFSF 346) are essential for inositol polyphosphate binding. This binding domain includes a sequence corresponding to the squid Pep20 peptide, which is also known to be essential for neurotransmitter release (Bommert, K., Charlton, M. P., DeBello, W. M., Chin, G. J., Betz, H., and Augustine, G. J. (1993) Nature 363, 163-165), suggesting that inositol polyphosphate has some effect on neurotransmitter release. Rabphilin 3A, another neuronal protein containing C2 domains, cannot bind IP4, indicating that the IP4 binding property is specific to the C2B domain of synaptotagmin. Phospholipid and IP4 binding experiments clearly indicated that the C2A and C2B domains have different functions. The C2A domain binds phospholipid in a Ca(2+)-dependent manner, but the C2B domain binds inositol polyphosphate and phospholipid irrespective of the presence of Ca2+. Our data suggest that the C2B domain of synaptotogamin is the inositol polyphosphate sensor at the synaptic vesicle and may be involved in synaptic function.