The metabolism of biologically active inositol phosphates in developed ovarian follicles from Xenopus laevis was investigated. Techniques used were microinjection of tracer into the intact oocyte coupled by gap junctions to follicle cells, as well as addition of tracer to homogenates of ovarian follicles and to homogenates of oocytes stripped of outer follicle-cell layers. Metabolism was similar to that previously described for other types of cell and tissue, with several unusual features. Homogenates of ovarian follicles were shown to contain an apparent 3'-phosphomonoesterase capable of converting [3H]Ins(1,3,4,5)P4 predominantly into a substance with h.p.l.c. elution characteristics of Ins(1,4,5)P3. In intact ovarian follicles, little Ins(1,4,5)P3 was formed but the esterase was activated by the phorbol ester activator of protein kinase C, PMA (phorbol 12-myristate 13-acetate; 60 nM), as well as by acetylcholine (200 microM). In follicle homogenates, this enzyme also appeared to be active in converting [3H]Ins(1,3,4)P3 into a substance eluting as Ins(1,4)P2. The apparent 3'-phosphomonoesterase activity was not inhibited by intracellular (or higher) levels of Mg2+. Although PMA activated this enzyme in intact oocytes relative to 5'-phosphomonoesterase activation, it did not enhance overall metabolism, in contrast with reports on other tissues. Compared with the processing of inositol phosphates injected into the intact follicle, homogenization in simulated intracellular medium appeared to alter the activity and/or accessibility of several enzymes. The metabolism of inositol phosphates appears to occur predominantly in the follicle cells surrounding the oocyte, as collagenase treatment followed by defolliculation greatly diminished the rates of metabolism of several inositol phosphates. The presence in Xenopus ovarian follicles of a 3'-phosphomonoesterase activated by protein kinase C in addition to the well-known 3'-kinase suggests that, by forming a reversible interconversion between Ins(1,4,5)P3 and Ins(1,3,4,5)P4, this tissue may have the potential to prolong stimulatory signals on binding of appropriate agonists to receptors.