Phosphorylated derivatives of phosphatidylinositol, collectively referred to as phosphoinositides, occur in the cytoplasmic leaflet of cellular membranes and regulate activities such as vesicle transport, cytoskeletal reorganization and signal transduction. Recent studies have indicated an important role for phosphoinositide metabolism in the aetiology of diseases such as cancer, diabetes, myopathy and inflammation. Although the biological functions of the phosphatases that regulate phosphatidylinositol-3,4,5-trisphosphate (PtdIns(3,4,5)P(3)) have been well characterized, little is known about the functions of the phosphatases regulating the closely related molecule phosphatidylinositol-3,4-bisphosphate (PtdIns(3,4)P(2)). Here we show that inositol polyphosphate phosphatase 4A (INPP4A), a PtdIns(3,4)P(2) phosphatase, is a suppressor of glutamate excitotoxicity in the central nervous system. Targeted disruption of the Inpp4a gene in mice leads to neurodegeneration in the striatum, the input nucleus of the basal ganglia that has a central role in motor and cognitive behaviours. Notably, Inpp4a(-/-) mice show severe involuntary movement disorders. In vitro, Inpp4a gene silencing via short hairpin RNA renders cultured primary striatal neurons vulnerable to cell death mediated by N-methyl-d-aspartate-type glutamate receptors (NMDARs). Mechanistically, INPP4A is found at the postsynaptic density and regulates synaptic NMDAR localization and NMDAR-mediated excitatory postsynaptic current. Thus, INPP4A protects neurons from excitotoxic cell death and thereby maintains the functional integrity of the brain. Our study demonstrates that PtdIns(3,4)P(2), PtdIns(3,4,5)P(3) and the phosphatases acting on them can have distinct regulatory roles, and provides insight into the unique aspects and physiological significance of PtdIns(3,4)P(2) metabolism. INPP4A represents, to our knowledge, the first signalling protein with a function in neurons to suppress excitotoxic cell death. The discovery of a direct link between PtdIns(3,4)P(2) metabolism and the regulation of neurodegeneration and involuntary movements may aid the development of new approaches for the treatment of neurodegenerative disorders.