GnRH provokes a phospholipid response in rat granulosa cells that has been characterized by increased incorporation of radioactive precursors into phosphatidic acid and phosphatidylinositol, and by depletion of 32P-prelabeled polyphosphoinositides. In this report, rat granulosa cells from mature Graafian follicles were incubated with GnRH under various conditions to follow the hydrolysis of phosphoinositides and the generation of the metabolic byproducts of phospholipase C action. Granulosa cells were prelabeled for 3 h with myo[2-3H]inositol. GnRH provoked rapid (10 sec) and sustained (up to 60 min) increases in the levels of inositol monophosphates, inositol bisphosphates, and inositol trisphosphates (IP3). Time-course studies revealed that IP3 was formed more rapidly than inositol bisphosphate and inositol monophosphate after GnRH treatment. The response to GnRH was concentration dependent (maximal at 10 ng/ml) and was prevented by a specific GnRH antagonist. Lithium chloride (1-10 mM) greatly enhanced the GnRH-provoked accumulation of all [3H]inositol phosphates, presumably by inhibiting the action of inositol phosphate phosphatases. No changes were observed in the levels of free [3H] inositol and [3H]phosphatidylinositol in GnRH-treated cells. However, treatment with both lithium and GnRH for 30 min significantly reduced the levels of free [3H]inositol and [3H] phosphatidylinositol. In the presence of lithium, the rate of hormone-stimulated inositol phosphate formation was not altered by 30 min of prior treatment with GnRH, indicating that phospholipase C activity is not readily desensitized. GnRH also increased the formation of diacylglycerol (DAG), another product of phospholipase C action. In cells prelabeled with [3H] arachidonic acid, GnRH significantly increased levels of DAG in incubations lasting 2-5 min. Concomitant increases in [3H] phosphatidic acid were also observed in GnRH-treated cells. In conjunction with these studies, intracellular free Ca2+ levels were measured by Quin 2 fluorescence. GnRH and its agonistic analog rapidly increased (5 sec) cytosolic free Ca2+ levels (approximately double). The results demonstrate that an early event in the action of GnRH is the hydrolysis of phosphoinositides by a phospholipase C-dependent mechanism. The products resulting from this action of GnRH, i.e. IP3 and DAG, may serve as intracellular mediators for the mobilization of intracellular calcium, or the activation of protein kinase C and arachidonic acid release.