Short-term activation of microsomal cholesterol ester hydrolase by glucagon, cAMP analogues, and vasopressin in isolated rat hepatocytes is described. Glucagon led to a dose- and time-dependent activation of cholesteryl oleate hydrolysis, but values returned to basal levels within 120 min. Exposure of isolated hepatocytes to 0.5 mM concentrations of dibutyryl-cAMP or 8-[4-chlorophenylthio]-cAMP, or 25 microM forskolin caused persistent activation of cholesterol ester hydrolase activity after a lag period of 30 min. The three agents resulted in early marked intracellular accumulation of cAMP that declined progressively, and moderate and sustained reductions in the diacylglycerol content. The actions of glucagon on hepatocytes were inhibited by pretreatment of cells with 10 nM [8-arginine] vasopressin. Vasopressin elicited a consistent and sustained increase in cholesterol ester hydrolase activity and diacylglycerol without affecting cAMP while reducing the effect of glucagon on cAMP. Furthermore, the effects of glucagon and vasopressin on the activation of cholesterol ester hydrolase were not additive despite the similarity of their stimulation of diacylglycerol formation. Blockade of vasopressin-mediated activation of cholesterol ester hydrolase and diacylglycerol content were induced by excess prazosin. These data suggest that stimulation of microsomal cholesterol ester hydrolase in isolated liver cells may involve at least two signal transduction systems.