Phosphoinositides control many different processes required for normal cellular function. Myotubularins are a family of Phosphatidylinositol 3-phosphate (PtdIns3P) phosphatases identified by the positional cloning of the MTM1 gene in patients suffering from X-linked myotubular myopathy and the MTMR2 gene in patients suffering from the demyelinating neuropathy Charcot-Marie-Tooth disease type 4B. MTM1 is a phosphatidylinositol phosphatase with reported specificity toward PtdIns3P, while the related proteins MTMR2 and MTMR3 hydrolyze both PtdIns3P and PtdIns(3,5)P2. We have investigated MTM1 and MTMR6 and find that they use PtdIns(3,5)P2 in addition to PtdIns3P as a substrate in vitro. The product of PtdIns(3,5)P2 hydrolysis, PtdIns5P, causes MTM1 to form a heptameric ring that is 12.5 nm in diameter, and it is a specific allosteric activator of MTM1, MTMR3, and MTMR6. A disease-causing mutation at arginine 69 of MTM1 falling within a putative pleckstrin homology domain reduces the ability of the enzyme to respond to PtdIns5P. We propose that the myotubularin family of enzymes utilize both PtdIns3P and PtdIns(3,5)P2 as substrates, and that PtdIns5P functions in a positive feedback loop controlling their activity. These findings highlight the importance of regulated phosphatase activity for the control of phosphoinositide metabolism.