This article investigates the possible grammaticalisation path followed by the commonly reconstructed Proto-Indo-European adverb *bhí, which developed into an inflectional ending on the one hand (in classical languages among others, e.g. Gr. -φι, Lat. -bus, Skt. -bhis), and into a preposition on the other hand (in Germanic languages, e.g. Eng. by, Ger. bei). The morpheme *-bhi has been interpreted as a derivational morpheme, which is attached to nominal bases to form adverbs, as well as a case ending pertaining to inflectional morphology. This study gives a brief overview of the uses of Gr. -φι, alongside with comparative material from other Indo-European languages. Having mentioned few problematic etymologies (Gr. νόσφι, ἀμφί, Lat. ubi), the paper takes into account various hypotheses that have been advanced for the reconstruction of the morphological and semantic path of *bhí. Its position in the sentence, before the verb and after a nominal, may have led to the interpretation as a postposition, which then moved before the nominal. In the passage from adverb with local meaning (‘near’) to its employment in a nominal paradigm, a fundamental role was played by pronouns (e.g. Gr. σφι, Lat. vobis).