Prior to fertilization sperm has to undergo an activation process known as capaciation, leading to the acrosome reaction. Till now, little is known about the mechanism for preventing premature capacitation in sperm although decapacitation factors from various sources have been thought to be involved. In this study, we report that NYD-SP27, an isoform of phospholipase C Zeta 1 (PLCZ1), is localized to the sperm acrosome in mouse and human spermatozoa by immunofluorescence using a specific antibody. Western blot and double staining analyses show NYD-SP27 becomes detached from sperm, as they undergo capacitation and acrosome reaction. The absence of HCO3-, a key factor in activating capacitation, from the capacitation-inducing medium prevents the loss of NYD-SP27 from sperm. The anti-NYD-SP27 antibody also prevents the loss of NYD-SP27 from sperm, reduced the number of capacitated sperm, inhibited the acrosome reaction induced by ATP and progesterone, and inhibited agonist-induced PLC-coupled Ca2+ mobilization in sperm, which can be mimicked by the PLC inhibitor, U73122. These data strongly suggest that NYD-SP27 is a physiological inhibitor of PLC that acts as an intrinsic decapacitation factor in sperm to prevent premature capacitation and acrosome reaction.