Phosphoinositides are important signal transduction intermediates in cell growth, survival, and motility. We have invented a fluorescence sensor for polyphosphorylated phosphoinositides based on a peptide derived from the Listeria protein ActA that undergoes a random coil to helix transition upon lipid binding. The sensor, termed CAY, is a fusion protein of cyan and yellow fluorescent proteins flanking the peptide at its N- and C-termini, respectively. CAY displays fluorescence resonance energy transfer in vitro in the absence of phosphorylated phosphoinositides, and this energy transfer is lost upon interaction with these phospholipids. These results demonstrate that a short peptide undergoing a coil to helix transition can be sufficient for the engineering of a FRET-based biosensor. CAY is predominantly localized to the cytoplasm in fibroblasts expressing the sensor but shows loss of fluorescence resonance energy transfer in regions of active actin dynamics such as ruffles that have previously been demonstrated to contain high levels of phosphoinositides.