Slices of rat brainstem that had been prelabeled by in vivo injection of [3H]inositol were stimulated with carbachol in the presence of lithium and changes measured in the radioactivity of inositol lipids and water-soluble inositol phosphates. For the latter, significant increases were seen for inositol mono- and bisphosphate but not inositol trisphosphate. Analysis of whole tissue phosphoinositides revealed significantly reduced radioactivity in phosphatidylinositol and phosphatidylinositol 4-phosphate, whereas myelin showed decreases in those as well as phosphatidylinositol 4,5-bisphosphate. These effects were blocked by atropine. Stimulation of the tissue slices with elevated K+ resulted in increased formation of inositol phosphate and decreased radioactivity in phosphatidylinositol. The effect was not blocked by atropine and in the presence of this agent, which reduced background reaction, all 3 phosphoinositides showed significant K+-induced loss of label. Elevated K+ and carbachol thus function through different mechanisms in this system. Carbachol is believed to affect myelin phosphoinositides through direct interaction with muscarinic receptors which were recently shown to be present in this membrane.