Membrane fusion and fission events in intracellular trafficking are controlled by both intraluminal Ca²⁺ release and phosphoinositide (PIP) signalling. However, the molecular identities of the Ca²⁺ release channels and the target proteins of PIPs are elusive. In this paper, by direct patch-clamping of the endolysosomal membrane, we report that PI(3,5)P₂, an endolysosome-specific PIP, binds and activates endolysosome-localized mucolipin transient receptor potential (TRPML) channels with specificity and potency. Both PI(3,5)P₂-deficient cells and cells that lack TRPML1 exhibited enlarged endolysosomes/vacuoles and trafficking defects in the late endocytic pathway. We find that the enlarged vacuole phenotype observed in PI(3,5)P₂-deficient mouse fibroblasts is suppressed by overexpression of TRPML1. Notably, this PI(3,5)P₂-dependent regulation of TRPML1 is evolutionarily conserved. In budding yeast, hyperosmotic stress induces Ca²⁺ release from the vacuole. In this study, we show that this release requires both PI(3,5)P₂ production and a yeast functional TRPML homologue. We propose that TRPMLs regulate membrane trafficking by transducing information regarding PI(3,5)P₂ levels into changes in juxtaorganellar Ca²⁺, thereby triggering membrane fusion/fission events.