PtdIns(4,5)P2 (phosphatidylinositol 4,5-bisphosphate) is a relatively common anionic lipid that regulates cellular functions by multiple mechanisms. Hydrolysis of PtdIns(4,5)P2 by phospholipase C yields inositol trisphosphate and diacylglycerol. Phosphorylation by phosphoinositide 3-kinase yields PtdIns(3,4,5)P3, which is a potent signal for survival and proliferation. Also, PtdIns(4,5)P2 can bind directly to integral and peripheral membrane proteins. As an example of regulation by PtdIns(4,5)P2, we discuss phosphatase and tensin homologue deleted on chromosome 10 (PTEN) in detail. PTEN is an important tumor suppressor and hydrolyzes PtdIns(3,4,5)P3. PtdIns(4,5)P2 enhances PTEN association with the plasma membrane and activates its phosphatase activity. This is a critical regulatory mechanism, but a detailed description of this process from a structural point of view is lacking. The disordered lipid bilayer environment hinders structural determinations of membrane-bound PTEN. A new method to analyze membrane-bound protein measures neutron reflectivity for proteins bound to tethered phospholipid membranes. These methods allow determination of the orientation and shape of membrane-bound proteins. In combination with molecular dynamics simulations, these studies will provide crucial structural information that can serve as a foundation for our understanding of PTEN regulation in normal and pathological processes.