Proper neutrophil migration into inflammatory sites ensures host defense without tissue damage. Phosphoinositide 3-kinase (PI(3)K) and its lipid product phosphatidylinositol 3,4,5-trisphosphate (PtdIns(3,4,5)P(3)) regulate cell migration, but the role of PtdIns(3,4,5)P(3)-degrading enzymes in this process is poorly understood. Here, we show that Src homology 2 (SH2) domain-containing inositol-5-phosphatase 1 (SHIP1), a PtdIns(3,4,5)P(3) phosphatase, is a key regulator of neutrophil migration. Genetic inactivation of SHIP1 led to severe defects in neutrophil polarization and motility. In contrast, loss of the PtdIns(3,4,5)P(3) phosphatase PTEN had no impact on neutrophil chemotaxis. To study PtdIns(3,4,5)P(3) metabolism in living primary cells, we generated a novel transgenic mouse (AktPH-GFP Tg) expressing a bioprobe for PtdIns(3,4,5)P(3.) Time-lapse footage showed rapid, localized binding of AktPH-GFP to the leading edge membrane of chemotaxing ship1(+/+)AktPH-GFP Tg neutrophils, but only diffuse localization in ship1(-/-)AktPH-GFP Tg neutrophils. By directing where PtdIns(3,4,5)P(3) accumulates, SHIP1 governs the formation of the leading edge and polarization required for chemotaxis.