TRPV3 is a thermosensitive channel that is robustly expressed in skin keratinocytes and activated by innocuous thermal heating, membrane depolarization, and chemical agonists such as 2-aminoethyoxy diphenylborinate, carvacrol, and camphor. TRPV3 modulates sensory thermotransduction, hair growth, and susceptibility to dermatitis in rodents, but the molecular mechanisms responsible for controlling TRPV3 channel activity in keratinocytes remain elusive. We show here that receptor-mediated breakdown of the membrane lipid phosphatidylinositol (4,5) bisphosphate (PI(4,5)P(2)) regulates the activity of both native TRPV3 channels in primary human skin keratinocytes and expressed TRPV3 in a HEK-293-derived cell line stably expressing muscarinic M(1)-type acetylcholine receptors. Stimulation of PI(4,5)P(2) hydrolysis or pharmacological inhibition of PI 4 kinase to block PI(4,5)P(2) synthesis potentiates TRPV3 currents by causing a negative shift in the voltage dependence of channel opening, increasing the proportion of voltage-independent current and causing thermal activation to occur at cooler temperatures. The activity of single TRPV3 channels in excised patches is potentiated by PI(4,5)P(2) depletion and selectively decreased by PI(4,5)P(2) compared with related phosphatidylinositol phosphates. Neutralizing mutations of basic residues in the TRP domain abrogate the effect of PI(4,5)P(2) on channel function, suggesting that PI(4,5)P(2) directly interacts with a specific protein motif to reduce TRPV3 channel open probability. PI(4,5)P(2)-dependent modulation of TRPV3 activity represents an attractive mechanism for acute regulation of keratinocyte signaling cascades that control cell proliferation and the release of autocrine and paracrine factors.