We have previously shown that 1,25-dihydroxyvitamin D3 (1,25(OH)2D3) plays a major role in growth zone chondrocyte (GC) differentiation and that this effect is mediated by protein kinase C (PKC). The aim of the present study was to identify the signal transduction pathway used by 1,25(OH)2D3 to stimulate PKC activation. Confluent, fourth passage GC cells from costochondral cartilage were used to evaluate the mechanism of PKC activation. Treatment of GC cultures with 1,25(OH)2D3 elicited a dose-dependent increase in both inositol-1,4,5-trisphosphate and diacylglycerol (DAG) production, suggesting a role for phospholipase C and potentially for phospholipase D. Addition of dioctanoylglycerol to plasma membranes isolated from GCs increased PKC activity. Neither pertussis toxin nor choleratoxin had an inhibitory effect on PKC activity in control or 1,25(OH)2D3-treated GCs, indicating that neither Gi nor Gs proteins were involved. Phospholipase A2 inhibitors, quinacrine, OEPC (selective for secretory phospholipase A2), and AACOCF3 (selective for cytosolic phospholipase A2), and the cyclooxygenase inhibitor indomethacin decreased PKC activity, while the phospholipase A2 activators melittin and mastoparan increased PKC activity in GC cultures. Arachidonic acid and prostaglandin E2, two downstream products of phospholipase A2 action, also increased PKC activity. These results indicate that 1,25(OH)2D3-dependent stimulation of PKC activity is regulated by two distinct phospholipase-dependent mechanisms: production of DAG, primarily via phospholipase C and production of arachidonic acid via phospholipase A2.