Insulin stimulates the hydrolysis of a phosphatidylinositol-glycan, resulting in the generation of two related inositol phosphate-glycan enzyme modulators and diacylglycerol. A phosphatidylinositol-glycan-specific phospholipase C that catalyzed this reaction was found in the plasma-membrane fraction of rat liver. The enzymatic activity was measured by the release of diacylglycerol from the glycosylated-phosphatidylinositol-membrane-anchored variant surface glycoproteins of African trypanosomes. The enzyme also catalyzed the production of an inositol phosphate-glycan from an insulin-sensitive phosphatidylinositol-glycan precursor. The enzyme was solubilized with neutral nonionic detergent and purified to near homogeneity by anion-exchange chromatography on DEAE-cellulose, followed by hydrophobic chromatography on butyl-agarose. The resulting enzyme preparation was purified approximately 20,000-fold from whole liver and exhibited one major silver-stained band of Mr 52,000 on NaDodSO4/PAGE. Gel permeation chromatography of the purified activity revealed a Stokes radius of 35 A and an apparent molecular weight of 62,000, suggesting that the enzyme was tightly associated with lipid or detergent but existed as a monomer in its active form. The enzyme was specific for glycosylated phosphatidylinositol; no hydrolysis of phosphatidylinositol, phosphatidylinositol 4,5-bisphosphate, or phosphatidylcholine was observed. The enzyme was calcium independent and thiol activated. These data suggest a role for the phosphatidylinositol-glycan-specific phospholipase C as an effector for some of the metabolic actions of insulin.