Syndecan-4 is a transmembrane heparan sulfate proteoglycan that can regulate cell-matrix interactions and is enriched in focal adhesions. Its cytoplasmic domain contains a central region unlike that of any other vertebrate or invertebrate syndecan core protein with a cationic motif that binds inositol phospholipids. In turn, lipid binding stabilizes the syndecan in oligomeric form, with subsequent binding and activation of protein kinase C. The specificity of phospholipid binding and its potential regulation are investigated here. Highest affinity of the syndecan-4 cytoplasmic domain was seen with phosphatidylinositol 4,5-bisphosphate (PtdIns-(4,5P)2) and phosphatidylinositol 4-phosphate, and both promoted syndecan-4 oligomerization. Affinity was much reduced for 3-phosphorylated inositides while no binding of diacylglycerol was detected. Syndecan-2 cytoplasmic domain had negligible affinity for any lipid examined. Inositol hexakisphosphate, but not inositol tetrakisphosphate, also had high affinity for the syndecan-4 cytoplasmic domain and could compete effectively with PtdIns(4,5)P2. Since inositol hexaphosphate binding to syndecan-4 does not promote oligomer formation, it is a potential down-regulator of syndecan-4 signaling. Similarly, phosphorylation of serine 183 in syndecan-4 cytoplasmic domain reduced PtdIns(4,5)P2 binding affinity by over 100-fold, although interaction could still be detected by nuclear magnetic resonance spectroscopy. Only protein kinaseCα was up-regulated in activity by the combination of syndecan-4 and PtdIns(4,5)P2, with all other isoforms tested showing minimal response. This is consistent with the codistribution of syndecan-4 with the α isoform of protein kinase C in focal adhesions.