The Principal Investigator (PI) is the individual who is ultimately held responsible for the successful completion of promised grant activities. The identification of a person as PI (or in some cases, Co-PI) is an important distinction, and speaks to the high level of responsibility held by that individual. Typically the PI is the person who has taken a leadership role in the writing of the grant proposal, and who then goes on to direct the key grant activities (e.g., insuring that project activities stay on time, that funds are managed properly, that reports are delivered to the funding agency on time, etc). There may be a number of investigators on a project (i.e., people who take responsibility for a particular aspect of a research project), but typically there is only one PI – some funding agencies may be concerned that if there are multiple PIs, it will not be clear who is ultimately responsible for the project.
A more formal description for the Principal Investigator is available below (adapted from http://grants.nih.gov/grants/glossary )
The individual(s) designated by the applicant organization (e.g., your university) to have the appropriate level of authority and responsibility to direct the project or program to be supported by the award. The applicant organization may designate multiple individuals as program directors/principal investigators (PD/PIs) who share the authority and responsibility for leading and directing the project, intellectually and logistically. When multiple PD/PIs are named, each is responsible and accountable to the applicant organization, or as appropriate, to a collaborating organization for the proper conduct of the project or program including the submission of all required reports. The presence of more than one PD/PI on an application or award diminishes neither the responsibility nor the accountability of any individual PD/PI.