The Saccharomyces cerevisiae inositol polyphosphate 5-phosphatases (Inp51p, Inp52p, and Inp53p) each contain an N-terminal Sac1 domain, followed by a 5-phosphatase domain and a C-terminal proline-rich domain. Disruption of any two of these 5-phosphatases results in abnormal vacuolar and plasma membrane morphology. We have cloned and characterized the Sac1-containing 5-phosphatases Inp52p and Inp53p. Purified recombinant Inp52p lacking the Sac1 domain hydrolyzed phosphatidylinositol 4,5-bisphosphate [PtdIns(4,5)P(2)] and PtdIns(3, 5)P(2). Inp52p and Inp53p were expressed in yeast as N-terminal fusion proteins with green fluorescent protein (GFP). In resting cells recombinant GFP-tagged 5-phosphatases were expressed diffusely throughout the cell but were excluded from the nucleus. Following hyperosmotic stress the GFP-tagged 5-phosphatases rapidly and transiently associated with actin patches, independent of actin, in both the mother and daughter cells of budding yeast as demonstrated by colocalization with rhodamine phalloidin. Both the Sac1 domain and proline-rich domains were able to independently mediate translocation of Inp52p to actin patches, following hyperosmotic stress, while the Inp53p proline-rich domain alone was sufficient for stress-mediated localization. Overexpression of Inp52p or Inp53p, but not catalytically inactive Inp52p, which lacked PtdIns(4,5)P(2) 5-phosphatase activity, resulted in a dramatic reduction in the repolarization time of actin patches following hyperosmotic stress. We propose that the osmotic-stress-induced translocation of Inp52p and Inp53p results in the localized regulation of PtdIns(3,5)P(2) and PtdIns(4,5)P(2) at actin patches and associated plasma membrane invaginations. This may provide a mechanism for regulating actin polymerization and cell growth as an acute adaptive response to hyperosmotic stress.