Actin cytoskeleton dynamics depend on a tight regulation of actin filament formation from an intracellular pool of monomers, followed by their linkage to each other or to cell membranes, followed by their depolymerization into a fresh pool of actin monomers. The ubiquitous requirement for continuous actin remodeling that is necessary for many cellular functions is orchestrated in large part by actin binding proteins whose affinity for actin is altered by inositol phospholipids, most prominently PI(4,5)P2 (phosphatidylinositol 4,5-bisphosphate). The kinetics of PI(4,5)P2 synthesis and hydrolysis, its lateral distribution within the lipid bilayer, and coincident detection of PI(4,5)P2 and another signal, all play a role in determining when and where a particular PI(4,5)P2-regulated protein is inactivated or activated to exert its effect on the actin cytoskeleton. This review summarizes a range of models that have been developed to explain how PI(4,5)P2 might function in the complex chemical and structural environment of the cell based on a combination of experiment and computational studies.