Although neurons are highly polarized, how neuronal polarity is generated remains poorly understood. An evolutionarily conserved inositol-producing enzyme myo-inositol monophosphatase ( IMPase) is essential for polarized localization of synaptic molecules in Caenorhabditis elegans and can be inhibited by lithium, a drug for bipolar disorder. The synaptic defect of IMPase mutants causes defects in sensory behaviors including thermotaxis. Here we show that the abnormalities of IMPase mutants can be suppressed by mutations in two enzymes, phospholipase C beta or synaptojanin, which presumably reduce the level of membrane phosphatidylinositol 4,5-bisphosphate (PIP2). We also found that mutations in phospholipase C beta conferred resistance to lithium treatment. Our results suggest that reduction of PIP2 on plasma membrane is a major cause of abnormal synaptic polarity in IMPase mutants and provide the first in vivo evidence that lithium impairs neuronal PIP2 synthesis through inhibition of IMPase. We propose that the PIP2 signaling regulated by IMPase plays a novel and fundamental role in the synaptic polarity.