Horse platelets prelabeled with [ 14C]arachidonate (AA) rapidly degrade [ 14C]phosphatidylinositol (PI) to [ 14C]1,2-diacylglycerol (DG) upon treatment with deoxycholate (DOC). This phospholipase-C (PLC) activity is specific for PI since other phospholipids or neutral lipids are not affected. Although exogenous Ca 2+ is not required for activity, EGTA or EDTA abolishes PI degradation. Addition of Mg 2+ (1 mM) and ATP (1 mM) results in phosphorylation of the DG and production of phosphatidic acid (PA). Higher concentrations of DOC inhibit DG-kinase. These observations, together with the fact that different platelet agonists induce a rapid degradation of PI and production of PA, indicate that PLC and DG-kinase activities are intimately linked. Incubation of platelets with dibutyryl cyclic-AMP, cyclic AMP-phosphodiesterase inhibitors and pyridoxal-5′-phosphate, which prevent platelet aggregation, inhibits the DOC-dependent conversion of PI to DG. The activity of PLC may play a central role in mediating platelet function and aggregation.