The phosphatidylinositol (PI) cycle mediates many cellular events by controlling the metabolism of many lipid second messengers. Diacylglycerol kinase epsilon (DGK epsilon) has an important role in this cycle. DGK epsilon is the only DGK isoform to show inhibition by its product phosphatidic acid (PA) as well as substrate specificity for sn-2 arachidonoyl-diacylglycerol (DAG). Here, we show that this inhibition and substrate specificity are both determined by selectivity for a combination of the sn-1 and sn-2 acyl chains of PA or DAG, respectively, preferring the most prevalent acyl chain composition of lipids involved specifically in the PI cycle, 1-stearoyl-2-arachidonoyl. Although the difference in rate for closely related lipid species is small, there is a significant enrichment of 1-stearoyl-2-arachidonoyl PI because of the cyclical nature of PI turnover. We also show that the inhibition of DGK epsilon by PA is competitive and that the deletion of the hydrophobic segment and cationic cluster of DGK epsilon does not affect its selectivity for the acyl chains of PA or DAG. Thus, this active site not only recognizes the lipid headgroup but also a combination of the two acyl chains in PA or DAG. We propose a mechanism of DGK epsilon regulation where its dual acyl chain selectivity is used to negatively regulate its enzymatic activity in a manner that ensures DGK epsilon remains committed to the PI turnover cycle. This novel mechanism of enzyme regulation within a signaling pathway could serve as a template for the regulation of enzymes in other pathways in the cell.