The current studies explore the role of phospholipase D (PLD) in mast cell activation. Although most investigators believe that receptor-mediated accumulation of 1,2-diacylglycerol (DAG) occurs by phospholipase C hydrolysis of phosphoinositides, our previous work indicated a modest role for these substrates and suggested that phosphatidylcholine (PC) is the more likely substrate. PLD cleaves the terminal phosphodiester bond of phospholipids to yield phosphatidic acid (PA), but in the presence of ethanol, it transfers the phosphatidyl moiety of the phospholipid substrate to ethanol producing phosphatidylethanol (PEt); a reaction termed transphosphatidylation. In purified rat mast cells prelabeled with [3H]arachidonic acid, [3H]palmitic acid, or 1-O-[3H]alkyl-lysoPC, a receptor-associated increase in PLD activity was initially suggested by the rapid accumulation of labeled PA, although other mechanisms might be involved. PLD activity was assessed more directly by the production of labeled PEt by PLD-mediated transphosphatidylation in the presence of ethanol. IgE receptor cross-linking resulted in a 3- to 10-fold increase in PLD activity during the 10 min after stimulation, approximately 50% of which occurred during the first two min. PEt formation was dependent on the concentration of ethanol and was maximal at 0.5%. At concentrations of ethanol greater than or equal to 0.2%, receptor-dependent formation of PA was reduced suggesting that the ethanol promoted transphosphatidylation at the expense of hydrolysis. The dose-related decline in PA accumulation seen in the presence of ethanol was similar to ethanol-mediated inhibition of exocytosis suggesting that receptor-mediated PA formation may be of regulatory importance. These observations indicate that PLD-mediated formation of PA occurs in stimulated mast cells and, in conjunction with separate findings of PA phosphohydrolase conversion of PA to DAG in mast cells, suggest that a major mechanism of DAG formation during mast cell activation is PC----PA----DAG.