The 5-diphosphoinositol pentakisphosphate (5-InsP7) and bisdiphosphoinositol tetrakisphosphate (InsP8) are “energetic” inositol pyrophosphate signaling molecules that regulate bioenergetic homeostasis. Inositol pyrophosphate levels are regulated by diphosphoinositol pentakisphosphate kinases (PPIP5Ks); these are large modular proteins that host a kinase domain (which phosphorylates 5-InsP7 to InsP8), a phosphatase domain that catalyzes the reverse reaction, and a polyphosphoinositide-binding domain (PBD). Here, we describe new interactions between these three domains in the context of full-length human PPIP5K1. We determine that InsP7 kinase activity is dominant when PPIP5K1 is expressed in intact cells; in contrast, we found that InsP8 phosphatase activity prevails when the enzyme is isolated from its cellular environment. We approach a reconciliation of this disparity by showing that cellular InsP8 phosphatase activity is inhibited by C8-PtdIns(4,5)P2 (IC50 ~40 μM). We recapitulate this phosphatase inhibition with natural PtdIns(4,5)P2 that was incorporated into large unilamellar vesicles. Additionally, PtdIns(4,5)P2 increases net InsP7 kinase activity 5-fold. We demonstrate that PtdIns(4,5)P2 is not itself a phosphatase substrate; its inhibition of InsP8 phosphatase activity results from an unusual, functional overlap between the phosphatase domain and the PBD. Finally, we discuss the significance of PtdIns(4,5)P2 as a novel regulator of PPIP5K1, in relation to compartmentalization of InsP7/InsP8 signaling in vivo.