Aggregation of the high affinity receptor for IgE (Fc epsilon RI) on the surface of mast cells results in the rapid hydrolysis of membrane inositol phospholipids by phospholipase C (PLC). Although at least seven isoenzymes of PLC have been characterized in different mammalian cells, the isoenzyme involved in Fc epsilon RI-mediated signal transduction and the mechanism of its activation have not been demonstrated. We now report that PLC-gamma 1 is translocated to the membrane of mast cells after aggregation of Fc epsilon RI. Activation of rat basophilic leukemia cells, a rat mast cell line, with oligomeric IgE resulted in an increase in PLC activity in washed membrane preparations in a cell free assay containing exogenous [3H]phosphatidylinositol (PI). The increase in PLC activity has the same dose-response to oligomeric IgE as receptor mediated hydrolysis of inositol lipids (PI hydrolysis) in intact cells. Analysis by Western blot probed with anti-PLC-gamma 1 antibody revealed that there is a three- to fourfold increase in PLC-gamma 1 in membranes from activated cells. The increase in PLC activity is augmented a further 20% by the addition of orthovanadate to the incubation medium suggesting that a tyrosine phosphatase is involved in the down-regulation of this phenomenon. These findings demonstrate translocation of PLC-gamma 1 to the membrane following activation of a receptor which does not contain intrinsic tyrosine kinase activity. Activation of PLC-gamma 1 by this pathway may account for Fc epsilon RI-mediated PI hydrolysis.