Mutations in dysferlin, a novel membrane protein of unknown function, lead to muscular dystrophy. Myoferlin is highly homologous to dysferlin and like dysferlin is a plasma membrane protein with six C2 domains highly expressed in muscle. C2 domains are found in a variety of membrane-associated proteins where they have been implicated in calcium, phospholipid, and protein-binding. We investigated the pattern of dysferlin and myoferlin expression in a cell culture model of muscle development and found that dysferlin is expressed in mature myotubes. In contrast, myoferlin is highly expressed in elongated "prefusion" myoblasts and is decreased in mature myotubes where dysferlin expression is greatest. We tested ferlin C2 domains for their ability to bind phospholipid in a calcium-sensitive manner. We found that C2A, the first C2 domain of dysferlin and myoferlin, bound 50% phosphatidylserine and that phospholipid binding was regulated by calcium concentration. A dysferlin point mutation responsible for muscular dystrophy was engineered into the dysferlin C2A domain and demonstrated reduced calcium-sensitive phospholipid binding. Based on these data, we propose a mechanism for muscular dystrophy in which calcium-regulated phospholipid binding is abnormal, leading to defective maintenance and repair of muscle membranes.