TORC1, a conserved protein kinase, regulates cell growth in response to nutrients. Localization of mammalian TORC1 to lysosomes is essential for TORC1 activation. Phosphatidylinositol 3,5-bisphosphate (PI3,5P2) an endosomal signaling lipid, is implicated in insulin-dependent stimulation of TORC1 activity in adipocytes. This raises the question of whether PI3,5P2 is an essential general regulator of TORC1. Moreover, the subcellular location where PI3,5P2 regulates TORC1 was not known. Here we report that PI3,5P2 is required for TORC1 activity in yeast, and regulates TORC1 on the vacuole (lysosome). Furthermore, we show that the TORC1 substrate, Sch9 (a homolog of mammalian S6K), is recruited to the vacuole by direct interaction with PI3,5P2 where it is phosphorylated by TORC1. Importantly, we find that PI3,5P2 is required for multiple downstream pathways via TORC1-dependent phosphorylation of additional targets, including Atg13, the modification of which inhibits autophagy, and phosphorylation of Npr1, which releases its inhibitory function, and allows nutrient-dependent endocytosis. These findings reveal PI3,5P2 as a general regulator of TORC1 and suggest that PI3,5P2 provides a platform for TORC1 signaling from lysosomes.