Phosphatidylinositol 3-kinases (PI 3-kinases) regulate cellular functions through the 3'-phosphorylation of phosphatidylinositol (PI) and its derivatives. The PI 3-kinase product phosphatidylinositol 3-phosphate [PI(3)P] functions to recruit and activate effector proteins containing FYVE zinc finger domains. These proteins have various functions in endocytic membrane trafficking, cytoskeletal regulation and signal transduction. In order to understand the function of FYVE proteins, it is essential to study the formation, localisation, trafficking and turnover of PI(3)P. Here we review recent evidence that PI(3)P is formed on early endosomes through the activity of a PI 3-kinase which is recruited by the GTPase Rab5, and that the PI(3)P is subsequently internalised into intralumenal vesicles of multivesicular endosomes for turnover.