The cell biological principles that govern innate immune responses in Drosophila are unknown. Here, we report that Toll signaling in flies was dictated by the subcellular localization of the adaptor protein dMyD88. dMyD88 was located at the plasma membrane by a process dependent on a C-terminal phosphoinositide-binding domain. In vivo analysis revealed that lipid binding by dMyD88 was necessary for its antimicrobial and developmental functions as well as for the recruitment of the downstream cytosolic adaptor Tube to the cell surface. These data are reminiscent of the interactions between the mammalian Toll adaptors MyD88 and TIRAP with one major exception. In the mammalian system, MyD88 is the cytosolic adaptor that depends on the phosphoinositide-binding protein TIRAP for its recruitment to the cell surface. We therefore propose that dMyD88 is the functional homolog of TIRAP and that both proteins function as sorting adaptors to recruit downstream signaling adaptors to activated receptors.