Pigment epithelium-derived factor (PEDF), a 50-kDa extracellular serpin, is a neurotrophic and antiangiogenic factor for the retina. Its biological functions are independent from its serine protease inhibition potential. Previously we provided evidence for high affinity PEDF-binding sites and proteins in retina cell-surfaces. Recently a novel human retinal pigment epithelial gene was identified as potential PEDF receptor and termed PEDF-R (pseudonyms: PNLP2, TTS-2.1, ATGL, iPLAζ, desnutrin). It codes for a polypeptide (504 amino acids) with a patatin-like phospholipase (PLA2) domain, and 4 transmembrane, 3 intracellular and 2 extracellular regions. RT-PCR and immunohistochemistry confirmed the PEDF-R expression in the retina. The potential PLA2 activity of PEDF-R was investigated. Recombinant epitope-tagged PEDF-R polypeptide was synthesized in cell-free systems and purified. Using dilinoleoyl phosphatidylcholine as substrate, PEDF-R exhibited potent PLA activity, which was optimum at pH 7.5. Surface plasmon resonance revealed high affinity for the PEDF:PEDF-R interactions (KD = ~3 nM), which decreased significantly with other serpins (maspin, ovalbumin). Preincubation of PEDF-R with increasing concentrations of PEDF stimulated the PLA activity of PEDF-R, but the stimulation did not occur when BSA replaced PEDF. PEDF alone did not show activity, and did not stimulate hog pancreas PLA2. These results demonstrate that the recombinant PEDF-R exhibited PLA activity that liberates fatty acids, an activity that PEDF can stimulate, suggesting a molecular pathway by which ligand/receptor interaction on the cell-surface could generate a cellular signal. Supported by the Intramural Research Program of the NIH, NEI.