Class II formins are key regulators of actin and are essential for polarized plant cell growth. Here, we show that the class II formin N-terminal phosphatase and tensin (PTEN) domain binds phosphoinositide-3,5-bisphosphate (PI(3,5)P(2)). Replacing the PTEN domain with polypeptides of known lipid-binding specificity, we show that PI(3,5)P(2) binding was required for formin-mediated polarized growth. Via PTEN, formin also localized to the cell apex, phragmoplast, and to the cell cortex as dynamic cortical spots. We show that the cortical localization driven by binding to PI(3,5)P(2) was required for function. Silencing the kinases that produce PI(3,5)P(2) reduced cortical targeting of formin and inhibited polarized growth. We show a subset of cortical formin spots moved in actin-dependent linear trajectories. We observed that the linearly moving subpopulation of cortical formin generated new actin filaments de novo and along preexisting filaments, providing evidence for formin-mediated actin bundling in vivo. Taken together, our data directly link PI(3,5)P(2) to generation and remodeling of the cortical actin array.