l.2-Dimyristoyloxypropane-3-thiophospho(1D-1-m.yo-inositol) (D-thio-DMPI) was synthesized as a substrate for the continuous spectrophotometric assay of phosphatidylinositol-specific phospholipase C (PI-PLC) from Bacillus cereus. Release of thio-diglyceride is followed by a coupled reaction with 4,4′-dithiopyridine to produce a chromophore, 4-thiopyridine, measured by its absorption at 324 nm. Sonicated vesicles of D-thio-DMPI gave sigmoidal Michaelis-Menten kinetics with PI-PLC as a function of bulk concentration of substrate (Hill plot:Vmax = 132 μmol min−1, mg−1, apparent Km = 0.115 mM, h = 1.8). Addition of dimyristoyl phosphatidylcholine (DMPC) or dimyristoyl phosphatidylmethanol to vesicles of D-thio-DMPI resulted in an initial increase in rate followed by a decrease at higher concentrations of non-substrate lipid. Binding of PI-PLC to vesicles of DMPC with 10 mol% of N-dansyl phosphatidylethanolamine was demonstrated by fluorescence resonance energy transfer from tryptophan in the enzyme to the dansyl lipid probe.