Arachidonoyl-hydrolyzing phospholipase A2 plays a central role in providing substrate for the synthesis of the potent lipid mediators of inflammation, the eicosanoids, and platelet-activating factor. Although Ca2+ is required for arachidonic acid release in vivo and most phospholipase A2 enzymes require Ca2+ for activity in vitro, the role of Ca2+ in phospholipase A2 activation is not understood. We have found that an arachidonoyl-hydrolyzing phospholipase A2 from the macrophage-like cell line, RAW 264.7, exhibits Ca2(+)-dependent association with membrane. The intracellular distribution of the enzyme was studied as a function of the Ca2+ concentration present in homogenization buffer. The enzyme was found almost completely in the 100,000 x g soluble fraction when cells were homogenized in the presence of Ca2+ chelators and there was a slight decrease in soluble fraction activity when cells were homogenized at the level of Ca2+ in an unstimulated cell (80 nM). When cells were homogenized at Ca2+ concentrations expected in stimulated cells (230-450 nM), 60-70% of the phospholipase A2 activity was lost from the soluble fraction and became associated with the particulate fraction in a manner that was partly reversible with EGTA. Membrane-associated phospholipase A2 activity was demonstrated by [3H]arachidonic acid release both from exogenous liposomes and from radiolabeled membranes. With radiolabeled particulate fraction as substrate, this enzyme hydrolyzed arachidonic acid but not oleic acid from membrane phospholipid, and [3H]arachidonic acid was derived from phosphatidylcholine, phosphatidylethanolamine, and phosphatidylinositol/phosphatidylserine. We suggest a mechanism in which the activity of phospholipase A2 is regulated by Ca2+: in an unstimulated cell phospholipase A2 is found in the cytosol; upon receptor ligation the cytosolic Ca2+ concentration increases, and the enzyme becomes membrane-associated which facilitates arachidonic acid hydrolysis.