The properties, subcellular distribution, and the effects of Mg2+ and propranolol on phosphatidate phosphohydrolase (EC 3.1.3.4) from rabbit iris smooth muscle have been investigated. The particulate and soluble (0-30% (NH4)2SO4 fraction) enzymes were assayed using aqueous phosphatidate dispersions and membrane-bound phosphatidate as substrates, respectively. When measured with aqueous substrate, activity was detected in both the particulate and soluble fractions, with the highest relative specific activity found in the microsomal fraction. Maximum dephosphorylation by the microsomal enzyme was about 1100 nmol of inorganic phosphate released/h per milligram protein and occurred at pH 7.0-7.5. In general Mg2+ inhibited the phosphohydrolase activity of the microsomal fraction and stimulated that of the soluble fraction, and the effects of the divalent cation on both of these activities were reversed by propranolol. The microsomal enzyme was slightly stimulated by deoxycholate and inhibited by the divalent cations Mg2+, Ca2+, and Mn2+ at concentrations greater than 0.25 mM. In contrast, the soluble enzyme was stimulated by Mg2+. Inhibition of the microsomal enzyme by Mg2+ (0.5 mM) was reversed by both EDTA, which also stimulated at higher concentrations (1 mM), and propranolol (0.1-0.2 mM). The inhibitory effect of Ca2+ on the enzyme was not reversed by propranolol. In the absence of Mg2+, the microsomal enzyme was inhibited by propranolol in a dose-dependent manner, and both in the absence and presence of the divalent cation the soluble enzyme was inhibited by the drug in a similar manner. These data suggest that the cationic moiety of propranolol may act by competing at the Mg2+-binding sites.(ABSTRACT TRUNCATED AT 250 WORDS)