Phosphatidylinositol 4,5-bisphosphate [PtdIns(4, 5)P2] has been known to bind to the pleckstrin homology domain and the phosphotyrosine-binding domain as well as actin-binding proteins, and to regulate their functions. We have tried to find new PtdIns(4,5)P2-binding proteins and to clarify the physiological effects of PtdIns(4,5)P2 on their function. We report here that histones H1 and H3 are PtdIns(4,5)P2-binding proteins which were identified using antibodies specific to PtdIns(4,5)P2, H1, and H3. This binding was further confirmed by extracting PtdIns(4,5)P2 from purified histone H1 and H3. Furthermore, the binding site of PtdIns(4,5)P2 in histone H1 was found in the carboxyl-terminal 103 amino acids. It was also shown that the amounts of PtdIns(4,5)P2 bound to H1 decrease when histone H1 is phosphorylated by protein kinase C but not by protein kinase A or cdc2 kinase, in vitro. The protein kinase C phosphorylation site is localized close to the PtdIns(4,5)P2-binding site, suggesting that phosphorylation of histone H1 by protein kinase C interferes stereostructually with PtdIns(4,5)P2 binding. We further noticed that PtdIns(4,5)P2 binding to H1 counteracts the histone H1-mediated repression of basal transcription by RNA polymerase II in a Drosophila transcription system in vitro. Phosphatidylinositol 4-phosphate and phosphatidylinositol 3,4,5-trisphosphate affect this transcription activity more weakly than PtdIns(4,5)P2, but PtdIns and other acidic lipids have no effect on this activity. These data indicate that PtdIns(4,5)P2 bound to nuclear protein histone H1 may contribute to the regulation of transcription in eukaryotic cells.