The results of studies to evaluate the hypothesis that the 21 kDa GTP-binding protein derived from the ras oncogene is involved in regulation and coupling of hormone receptors to phospholipase activity have thus far been inconsistent. We therefore examined the effect of H-ras transformation on basal, tumor-promoting phorbol ester (TPA)-stimulated, and bradykinin-mediated phospholipid hydrolysis in Madin Darby canine kidney cells (MDCK) by comparing H-ras-transformed MDCK cells (MDCK-RAS) to two non-transformed strains of MDCK cells (MDCK-D1 and MDCK-ATCC). In unstimulated MDCK-RAS, diacylglycerol (DAG), inositol phosphate accumulation, and choline phosphate release were increased while arachidonic acid and arachidonic acid metabolite (AA) release was not increased, suggesting that ras transformation increased phospholipase C activity. Protein kinase C (PK-C) activity was decreased, and specific binding of [3H]phorbol ester was reduced in MDCK-RAS relative to the non-transformed MDCK cells suggesting that elevated DAG may activate and thereby down-regulate PK-C. Consistent with this finding in MDCK-RAS, TPA-stimulated AA release and subsequent prostaglandin E2 production were decreased, while TPA-stimulated choline phosphate release was increased. Bradykinin receptor-stimulated phospholipid hydrolysis in MDCK-RAS was similar to that of non-transformed cells, suggesting that the ras-derived protein does not directly couple bradykinin receptors to phospholipases in MDCK cells. However, the ability of TPA-treatment to inhibit bradykinin-stimulated phosphoinositide hydrolysis and enhance bradykinin-stimulated AA release was attenuated in MDCK-RAS. Additionally, in MDCK-RAS the conversion of arachidonic acid to prostaglandin E2 was substantially reduced. We conclude that ras transformation of MDCK cells increases DAG levels, thereby activating and, in turn, down-regulating PK-C and certain responses to TPA. Since activation of PK-C may result in a variety of effects on signal transduction pathways, we propose that increased DAG and altered PK-C levels associated with ras transformation may account for the inconsistent effects previously observed in studies evaluating the effect of ras transformation on phospholipases and other signal transduction systems.