Gelsolin is a severing and capping protein that targets filamentous actin and regulates filament lengths near plasma membranes, contributing to cell movement and plasma membrane morphology. Gelsolin binds to the plasma membrane via phosphatidylinositol 4,5-bisphosphate (PIP2) in a state that cannot cap F-actin, and gelsolin-capped actin filaments are uncapped by PIP2 leading to filament elongation. The process by which gelsolin is removed from PIP2 at the plasma membrane is currently unknown. Gelsolin also binds ATP with unknown function. Here we characterize the role of ATP on PIP2-gelsolin complex dynamics. Fluorophore-labeled PIP2 and ATP were used to study their interactions with gelsolin using steady-state fluorescence anisotropy, and Alexa488-labeled gelsolin was utilized to reconstitute the regulation of gelsolin binding to PIP2-containing phospholipid vesicles by ATP. Under physiological salt conditions ATP competes with PIP2 for binding to gelsolin, while calcium causes the release of ATP from gelsolin. These data suggest a cycle for gelsolin activity. Firstly, calcium activates ATP-bound gelsolin allowing it to sever and cap F-actin. Secondly, PIP2-binding removes the gelsolin cap from F-actin at low calcium levels, leading to filament elongation. Finally, ATP competes with PIP2 to release the calcium-free ATP-bound gelsolin, allowing it to undergo a further round of severing.