Atg18 and Atg21 are homologous WD-40 repeat proteins that bind phosphoinositides via a novel conserved Phe-Arg-Arg-Gly motif and function in autophagy-related pathways. Atg18 is required for the cytoplasm to vacuole targeting (Cvt) pathway and autophagy, whereas Atg21 is only required for the Cvt pathway. Currently, the functions of both proteins are poorly understood. Here, we examined the relationship between the phosphatidylinositol 3-phosphate (PtdIns(3)P)-binding abilities of Atg18 and Atg21 and autophagy by expressing variants of these proteins that have mutations in their phosphoinositide-binding motifs. Cells expressing PtdIns(3)P-binding mutants of both these proteins showed highly reduced autophagy. Furthermore, the localization of components of two related ubiquitin-like protein conjugation systems, Atg8 and Atg16, to the phagophore assembly site is affected. Consistent with the aberrant localization of the above Atg proteins, precursor Ape1, a cargo of the Cvt pathway and autophagy, is partially protease-sensitive in starvation conditions. This finding suggests a requirement for the PtdIns(3)P binding capability of Atg18 and Atg21 in efficient completion of the sequestering autophagic vesicles. Finally, using a multiple knock-out strain, we found that Atg18 and Atg21 facilitate the recruitment of Atg8-PE to the site of autophagosome formation and protect it from premature cleavage by Atg4, which represents a key aspect of post-translational autophagy regulation. Taken together, our results suggest that PtdIns(3)P binding by at least Atg18 or Atg21 is required for robust autophagic activity and that the PtdIns(3)P-binding motifs of Atg18 and Atg21 can compensate for one another in the recruitment of Atg components that are dependent on PtdIns(3)P for their phagophore assembly site association.