Cytosolic phospholipase A2 (cPLA2) associates with natural membranes in response to physiological increases in Ca2+, resulting in the selective hydrolysis of arachidonyl phospholipids. The isolation and sequence analysis of cPLA2 cDNA clones from four different species revealed several highly conserved regions. The NH2-terminal conserved region is homologous to several other Ca(2+)-dependent lipid-binding proteins. Here we report that the first 178 residues of cPLA2, containing the homologous Ca(2+)-dependent lipid-binding (CaLB) motif, and another recombinant protein containing the cPLA2(1-178) fragment placed at the COOH terminus of the maltose-binding protein (MBP-CaLB) associate with membranes in a Ca(2+)-dependent manner. cPLA2 and MBP-CaLB also bind to synthetic liposomes at physiological Ca2+ concentrations, demonstrating that accessory proteins are not required. In contrast, delta C2, a truncated cPLA2 lacking the CaLB domain, fails to associate with membranes and fails to hydrolyze liposomal substrates. However, both delta C2 and cPLA2 hydrolyze monomeric 1-palmitoyl-2-lysophosphatidylcholine at identical rates in a Ca(2+)-independent fashion. These results delineate two functionally distinct domains of cPLA2, the Ca(2+)-independent catalytic domain, and the regulatory CaLB domain that presents the catalytic domain to the membrane in response to elevated Ca2+.