TORC1, a conserved protein kinase, regulates cell growth in response to nutrients. Localization of mammalian TORC1 to lysosomes is essential for TORC1 activation. Phosphatidylinositol 3,5-bisphosphate (PI(3,5)P(2)), an endosomal signaling lipid, is implicated in insulin-dependent stimulation of TORC1 activity in adipocytes. This raises the question of whether PI(3,5)P(2) is an essential general regulator of TORC1. Moreover, the subcellular location where PI(3,5)P(2) regulates TORC1 was not known. Here we report that PI(3,5)P(2) is required for TORC1 activity in yeast and regulates TORC1 on the vacuole (lysosome). Furthermore, we show that the TORC1 substrate, Sch9 (a homologue of mammalian S6K), is recruited to the vacuole by direct interaction with PI(3,5)P(2), where it is phosphorylated by TORC1. Of importance, we find that PI(3,5)P(2) is required for multiple downstream pathways via TORC1-dependent phosphorylation of additional targets, including Atg13, the modification of which inhibits autophagy, and phosphorylation of Npr1, which releases its inhibitory function and allows nutrient-dependent endocytosis. These findings reveal PI(3,5)P(2) as a general regulator of TORC1 and suggest that PI(3,5)P(2) provides a platform for TORC1 signaling from lysosomes.