The adapter protein Shc is a critical component of mitogenic signaling pathways initiated by a number of receptors. Shc can directly bind to several tyrosine-phosphorylated receptors through its phosphotyrosine-binding (PTB) domain, and a role for the PTB domain in phosphotyrosine-mediated signaling has been well documented. The structure of the Shc PTB domain demonstrated a striking homology to the structures of pleckstrin homology domains, which suggested acidic phospholipids as a second ligand for the Shc PTB domain. Here we demonstrate that Shc binding via its PTB domain to acidic phospholipids is as critical as binding to phosphotyrosine for leading to Shc phosphorylation. Through structure-based, targeted mutagenesis of the Shc PTB domain, we first identified the residues within the PTB domain critical for phospholipid binding in vitro. In vivo, the PTB domain was essential for localization of Shc to the membrane, as mutant Shc proteins that failed to interact with phospholipids in vitro also failed to localize to the membrane. We also observed that PTB domain-dependent targeting to the membrane preceded the PTB domain's interaction with the tyrosine-phosphorylated receptor and that both events were essential for tyrosine phosphorylation of Shc following receptor activation. Thus, Shc, through its interaction with two different ligands, is able to accomplish both membrane localization and binding to the activated receptor via a single PTB domain.