We have investigated the mechanism of action by which insulin increases phosphatidate (PA) and diacylglycerol (DAG) levels in cultured rat hepatocytes. Insulin initially stimulated phosphatidylcholine-dependent phospholipase D (PC-PLD) with a significant increase in both PA and intracellular as well as extracellular choline. The involvement of phospholipase D was confirmed by the formation of PC-derived phosphatidylethanol in the presence of ethanol. The DAG increase appeared to be biphasic. Only the early phase of DAG production was inhibited by propranolol, an inhibitor of the phosphatidate phosphatase (PAP) responsible for the conversion of PA into DAG, suggesting that initially the DAG increase is due to the PLD-PAP pathway. The delayed DAG increase was in parallel with increased intracellular and extracellular phosphocholine and probably derived directly from PC-PLC activity. Experiments performed in the presence of 1 microM phorbol 12-myristate 13-acetate (PMA) indicated that protein kinase C (PKC) mediated the insulin effect on PC-PLC, but not on PC-PLD. These findings were confirmed using the PKC inhibitors calphostin, H7 and staurosporine. The dual activation of these phospholipases with a biphasic elevation of DAG levels and activation of specific PKC isoenzymes could be necessary to elicit both early and delayed effects of insulin.