Lithium (Li(+)) is a common treatment for bipolar mood disorder, a major psychiatric illness with a lifetime prevalence of more than 1%. Risk of bipolar disorder is heavily influenced by genetic predisposition, but is a complex genetic trait and, to date, genetic studies have provided little insight into its molecular origins. An alternative approach is to investigate the genetics of Li(+) sensitivity. Using the social amoeba Dictyostelium, we previously identified prolyl oligopeptidase (PO) as a modulator of Li(+) sensitivity. In a link to the clinic, PO enzyme activity is altered in bipolar disorder patients. Further studies demonstrated that PO is a negative regulator of inositol(1,4,5)trisphosphate (IP(3)) synthesis, a Li(+) sensitive intracellular signal. However, it was unclear how PO could influence either Li(+) sensitivity or risk of bipolar disorder. Here we show that in both Dictyostelium and cultured human cells PO acts via Multiple Inositol Polyphosphate Phosphatase (Mipp1) to control gene expression. This reveals a novel, gene regulatory network that modulates inositol metabolism and Li(+) sensitivity. Among its targets is the inositol monophosphatase gene IMPA2, which has also been associated with risk of bipolar disorder in some family studies, and our observations offer a cellular signalling pathway in which PO activity and IMPA2 gene expression converge.