Cell division ends up with the membrane separation of two daughter cells, presumably by a membrane fusion that requires dynamic changes of the distribution and the composition of membrane lipids. We have previously shown that a membrane lipid phosphatidylethanolamine (PE) is exposed on the cell surface of the cleavage furrow during late cytokinesis and that this PE movement is involved in regulation of the contractile ring disassembly. Here we show that immobilization of cell surface PE by a PE-binding peptide blocks the RhoA inactivation in the late stage of cytokinesis. Phosphatidylinositol 4-phosphate 5-kinase (PIP5K), but not other RhoA effectors, is co-localized with RhoA in the peptide-treated cells. Indeed, PIP5K and its product phosphatidylinositol 4,5-bisphosphate (PI(4,5)P(2)) are localized to the cleavage furrow of normally dividing cells. Both overexpression of a kinase-deficient PIP5K mutant and microinjection of anti-PI(4,5)P(2) antibodies compromise cytokinesis by preventing local accumulation of PI(4,5)P(2) in the cleavage furrow. These findings demonstrate that the localized production of PI(4,5)P(2) is required for the proper completion of cytokinesis and that the possible formation of a unique lipid domain in the cleavage furrow membrane may play a crucial role in coordinating the contractile rearrangement with the membrane remodeling during late cytokinesis.