Propranolol, a cationic amphiphilic drug, caused enhanced incorporation of labeled precursor into phosphatidic acid and its metabolites in rat cerebral cortex mince, suggesting increased biosynthesis or reduced degradation. Inhibition of phosphatidate phosphohydrolase could explain the observed drug-induced accumulation of phosphatidic acid and other acidic lipids. Propranolol exhibited differential effects on the free and membrane-bound forms of phosphatidate phosphohydrolase. The drug inhibited cytoplasmic enzyme in a dose-dependent manner only when membrane-bound substrate was used but had practically no effect on the membrane-bound enzyme irrespective of the nature of the substrate used or on the cytoplasmic enzyme when free substrate was used. Brain cytoplasmic enzyme obtained from rats sacrificed 30 min after intraperitoneal injections of propranolol did not show any inhibition. propranolol bound to membranes may prevent cytoplasmic enzyme action, probably by decreasing the availability of substrate through the formation of stable lipid-drug-protein complexes.