Axonemes are microtubule-based organelles of crucial importance in the structure and function of eukaryotic cilia and flagella. Despite great progress in understanding how axonemes are assembled, the signals that initiate axoneme outgrowth remain unknown. Here, we identified phosphatidylinositol phosphates (phosphoinositides) as key regulators of early stages of axoneme outgrowth in Drosophila melanogaster spermatogenesis. In a study of phosphatidylinositol 4,5-bisphosphate [PtdIns(4,5)P2] function in developing Drosophila male germ cells, we depleted PtdIns(4,5)P2 by expression of a potent phosphoinositide phosphatase. Phosphatase expression dramatically inhibited sperm tail formation and perturbed microtubule organization in a manner reversible by co-expression of a PtdIns 4-phosphate 5-kinase. Depletion of PtdIns(4,5)P2 caused increased levels of basal body gamma-tubulin and altered the distribution of proteins known to be required for axoneme assembly. Examination of PtdIns(4,5)P2-depleted spermatids by transmission electron microscopy revealed defects in basal body docking to the nuclear envelope, and in axoneme architecture and integrity of the developing flagellar axoneme and axial sheath. Our results provide the first evidence that phosphoinositides act at several steps during flagellar biogenesis, coordinately regulating microtubule and membrane organization. They further suggest that phosphoinositides play evolutionarily conserved roles in flagella and cilia, across phyla and in structurally diverse cell types.