UNC-104 (KIF1A) is a kinesin motor that transports synaptic vesicles from the neuronal cell body to the terminal. Previous in vitro studies have shown that a Dictyostelium relative of UNC-104 transports liposomes containing acidic phospholipids, but whether this interaction is needed for the recognition and transport of synaptic vesicles in metazoans remains unexplored. Here, we have introduced mutations in the nonmotor domain of UNC-104 and examined whether these mutant motors can rescue an unc-104 Caenorhabditis elegans strain. We show that a pleckstrin homology (PH) domain in UNC-104 is essential for membrane transport in living C. elegans, that this PH domain binds specifically to phosphatidylinositol-4,5-bisphosphate (PI(4,5)P(2)), and that point mutants in the PH domain that interfere with PI(4,5)P(2) binding in vitro also interfere with UNC-104 function in vivo. Several other lipid-binding modules could not effectively substitute for the UNC-104 PH domain in this in vivo assay. Real time imaging also revealed that a lipid-binding point mutation in the PH domain reduced movement velocity and processivity of individual UNC-104::GFP punctae in neurites. These results reveal a critical role for PI(4,5)P(2) binding in UNC-104-mediated axonal transport and shows that the cargo-binding properties of the distal PH domain can affect motor output.