The phosphoinositide (PI) transduction system has proven to be of major importance in several regions of mammalian brain. In this report, we examined in rats whether a PI system is present in the hypothalamic suprachiasmatic nuclei (SCN), the site of a biological clock that generate circadian rhythms. Autoradiographic localization of phorbol ester binding revealed moderate levels of protein kinase C, a component of the PI system, in the SCN. Hypothalamic explants containing SCN showed substantial incorporation of [3H]myoinositol into lipids. AlF4-, a non-specific activator of G proteins, produced a dose-dependent increase in inositol monophosphate (IP1) levels in the explants in calcium-free medium, with a maximum increase of 216% of control at 50 mM NaF. Medium containing 1.8 mM calcium stimulated a similar increase in IP1 levels, but the stimulatory effects of AlF4- and calcium were not additive, so that the effect of Al4- was obscured in medium containing calcium. AlF4- stimulated accumulation of IP1, as well as inositol bis-, and trisphosphate, over a 40-min time course in the presence and absence of lithium (10 mM LiCl). Lithium, a known inhibitor of phosphatases in the inositol phosphate recycling pathway, raised levels of all 3 inositol phosphates in SCN explants both at baseline (without A1F4-) and after 30 min AlF4- stimulation. The results show the existence of a lithium-sensitive PI system within the suprachiasmatic region of the rat hypothalamus.