Neuronal precursor cell-expressed developmentally down-regulated 4 (Nedd4) is a ubiquitin protein ligase (E3) containing a hect domain, 3 or 4 WW domains, and a putative C2 domain. We have recently demonstrated an association between the WW domains of Nedd4 and the proline-rich PY motifs (XPPXY) of the epithelial Na+ channel, as well as with PY motifs of several other proteins. The role of the putative C2 domain of Nedd4 has not been elucidated. Here we show that Nedd4, endogenously expressed in Madin-Darby canine kidney cells, was redistributed from the cytosolic to the particulate fraction in response to ionomycin plus Ca2+ treatment. A similar treatment of polarized Madin-Darby canine kidney cells led to an apical and lateral membrane localization of Nedd4, as determined by immunostaining and confocal microscopy. The C2 domain of Nedd4, expressed as a glutathione S-transferase (GST) fusion protein, was sufficient to bind cellular membranes in a Ca2+-dependent manner. Moreover, this GST-Nedd4-C2 domain was able to mediate Ca2+-dependent interactions with phosphatidylserine, phosphatidylinositol, and phosphatidylcholine liposomes in vitro. An epitope-tagged Nedd4 lacking its C2 domain and stably expressed in Madin-Darby canine kidney cells failed to mediate the Ca2+-induced plasma membrane localization seen in wild-type (epitope-tagged) Nedd4. These results indicate that the putative C2 domain of Nedd4 acts as a bona fide C2 domain which binds phospholipids and membranes in a Ca2+-dependent fashion and is involved in localizing the protein primarily to the apical region of polarized epithelial cells in response to Ca2+.