PKD2, or polycystin 2, the product of the gene mutated in type 2 autosomal dominant polycystic kidney disease, belongs to the transient receptor potential channel super-family and has been shown to function as a nonselective cation channel in the plasma membrane. However, the mechanism of PKD2 activation remains elusive. We show that PKD2 overexpression increases epidermal growth factor (EGF)-induced inward currents in LLC-PK1 kidney epithelial cells, while the knockdown of endogenous PKD2 by RNA interference or the expression of a pathogenic missense variant, PKD2-D511V, blunts the EGF-induced response. Pharmacological experiments indicate that the EGF-induced activation of PKD2 occurs independently of store depletion but requires the activity of phospholipase C (PLC) and phosphoinositide 3-kinase (PI3K). Pipette infusion of purified phosphatidylinositol-4,5-bisphosphate (PIP2) suppresses the PKD2-mediated effect on EGF-induced conductance, while pipette infusion of phosphatidylinositol-3,4,5-trisphosphate (PIP3) does not have any effect on this conductance. Overexpression of type Iα phosphatidylinositol-4-phosphate 5-kinase [PIP(5)Kα], which catalyzes the formation of PIP2, suppresses EGF-induced currents. Biochemical experiments show that PKD2 physically interacts with PLC-γ2 and EGF receptor (EGFR) in transfected HEK293T cells and colocalizes with EGFR and PIP2 in the primary cilium of LLC-PK1 cells. We propose that plasma membrane PKD2 is under negative regulation by PIP2. EGF may reduce the threshold of PKD2 activation by mechanical and other stimuli by releasing it from PIP2-mediated inhibition.