The role of lipid composition in the interaction of purified protein kinase C with large unilamellar vesicles was determined by the extent of photolabelling of the enzyme with 5-[125I]iodonaphthalene-I-azide. The protein kinase C was only slightly labelled when exposed to phosphatidylcholine (PC) liposomes. The addition of phorbol 12-myristate 13-acetate (PMA) or of diacylglycerol to the PC liposomes enhanced significantly the labelling of the protein kinase C at low calcium concentrations. A further enhancement in the photolabelling of the protein kinase C was observed in liposomes containing 2% phosphatidylserine (PS). At low calcium concentrations, the binding of the enzyme to these liposomes increased in the presence of added PMA or diacylglycerol. Raising the levels of PS beyond 2% in the liposomes did not enhance the binding of the protein kinase C. However, when the enzymatic activity of the protein kinase C was measured using basic histones as substrates, maximum phosphorylation was obtained in liposomes with a PC to PS ratio of 1. The fact that the translocation of the protein kinase C from solution to the surface of the liposomes could be monitored by its labelling with 5-iodonaphthalene 1-azide prompted us to determine whether other cytoplasmic proteins might share this property. The interaction of cytoplasmic proteins from HeLa cells with PC liposomes gave trace labelling irrespective of whether calcium was added. When the HeLa cell cytoplasmic proteins were allowed to interact with liposomes containing PS, selective 5-iodonaphthalene-1-azide photolabelling was observed in distinct proteins. Addition of calcium and of PMA or diacylglycerol modified the labelling of some but not all of these proteins. These results suggest that the methodology developed might serve to identify proteins that move to the membrane during stimulation of cells by phorbol esters or by growth factors which induce the generation of diacylglycerol. These results also suggest a role for the phospholipid composition of the plasma membrane (or any intracellular membrane) in the modulation of the activation processes of specific phospholipid-dependent proteins, in particular protein kinase C.