PDZ domains are well known protein-protein interaction modules that, as part of multidomain proteins, assemble molecular complexes. Some PDZ domains have been reported to interact with membrane lipids, in particular phosphatidylinositol phosphates, but few studies have been aimed at elucidating the prevalence or the molecular details of such interactions. We screened 46 Drosophila PDZ domains for phosphoinositide-dependent cellular localization and discovered that the second PDZ domain of polychaetoid (Pyd PDZ2) interacts with phosphatidylinositol 4,5-bisphosphate (PtdIns(4,5)P(2)) at the plasma membrane. Surface plasmon resonance binding experiments with recombinant protein established that Pyd PDZ2 interacts with phosphatidylinositol phosphates with apparent affinities in the micromolar range. Electrostatic interactions involving an extended positively charged surface of Pyd PDZ2 are crucial for the PtdIns(4,5)P(2)-dependent membrane interactions as shown by a combination of three-dimensional modeling, mutagenesis, binding, and localization studies. In vivo localization studies further suggested that both lipid and peptide binding contribute to membrane localization. We identified the transmembrane protein Crumbs as a Pyd PDZ2 ligand and probed the relation between peptide and PtdIns(4,5)P(2) binding. Contrary to the prevalent view on PDZ/peptide/lipid binding, we did not find competition between peptide and lipid ligands. Instead, preloading the protein with the 10-mer Crb3 peptide increased the apparent affinity of Pyd PDZ2 for PtdIns(4,5)P(2) 6-fold. Our results suggest that membrane localization of Pyd PDZ2 may be driven by a combination of peptide and PtdIns(4,5)P(2) binding, which raises the intriguing possibility that the domain may coordinate protein- and phospholipid-mediated signals.