Phospholipase C-γ1 is a tightly regulated, multidomain protein that generates the second messengers inositol 1,4,5-trisphosphate and diacylglycerol. Kinetic analysis reveals that phospholipase C-γ1 displays apparent allosteric behavior. A previous study determined that proteolytic cleavage of the SH domain region of phospholipase C-γ1 yields an activated form of the enzyme (A. W. Fernald, G. A. Jones, and G. Carpenter Biochem. J. 302, 508, 1994). In this study, we show that activation of phospholipase C-γ1 by proteolysis decreases both the cooperativity and the half-maximal value of the enzyme for substrate. Kinetic analysis revealed that the mole fraction of phosphatidylinositol 4,5-bisphosphate (PIP2) that resulted in half-maximal PIP2 hydrolysis (S0.5) was lower for proteolyzed than uncleaved phospholipase C-γ1 (0.08 mole fraction vs 0.18 mole fraction of PIP2). The cooperativity index was lower for proteolyzed than full-length phospholipase C-γ1 (n = 2.5 vs n = 4). Kinetic analysis also revealed that the estimated dissociation constant was lower for phospholipase C-γ1 that had been subjected to proteolysis (0.1 mM vs 1.0 mM PIP2 for cleaved vs uncleaved phospholipase C-γ1, respectively). It was previously hypothesized that activation of phospholipase C-γ1 requires a conformational change that results in increased accessibility of substrate to the active site and that the SH domain of the enzyme is involved in the activation event. These experiments support the hypothesis that a portion of the protein covers the active site, allosterically inhibiting the enzyme, and that the removal of this “lid” domain activates the enzyme.