The effect of neomycin on polyphosphoinositides was studied in vivo and in vitro. In vivo, the incorporation of 32Pi into phosphatidylinositol phosphate and phosphatidylinositol diphosphate was measured in inner ear tissues. Concentrations of neomycin which decreased the electrophysiological response of the chochlea to sound stimulation also decreased labeling of phosphatidylinositol diphosphate. In vitro experiments with brain tissues and polyphosphoinositide extracts indicated a direct interaction between the lipids and neomycin. Neomycin interacts strongly with monomolecular films of polyphosphoinositides. The interaction appears to be complex and is a function of neomycin concentration in the subphase and surface pressure of the film. Condensation of the polyphosphoinositide film is favored at low neomycin concentrations and low film pressures while expansion of the film is favored at high neomycin concentrations and high film pressures. The interactions of neomycin with other negatively charged films (phosphatidyl inositol and phosphatidyl serine) are much weaker, particularly at low neomycin concentrations. The metabolic and physiological consequences of the neomycin/polyphosphoinositide interaction are discussed in regard to the ototoxicity of the drug.