Addition of vasopressin to rat hepatocytes prelabeled with myo-[2-3H]inositol resulted in a very rapid decrease [3H]phosphatidylinositol 4,5-bisphosphate (Ptd-Ins-4,5-P2) which was paralleled by increases of up to 3-fold in the levels of [3H]inositol trisphosphate (Ins-P3) and [3H]inositol bisphosphate (Ins-P2). Increases of [3H]inositol phosphate (Ins-P) were not detected until about 5 min after hormone addition. These data indicate that the major pathway for hormone-induced lipid breakdown in liver is through a phosphodiesterase for PtdIns-4,5-P2 and that decreases of phosphatidylinositol are a secondary result of increased PtdIns-4,5-P2 resynthesis. Using the fluorescent Ca2+ indicator Quin 2, cytosolic free Ca2+ increased from 160 nM to about 400 nM after vasopressin addition to hepatocytes and preceded the conversion of phosphorylase b to a. Half-maximal and maximal increases of cytosolic free Ca2+ and phosphorylase a activity were observed at 0.2 and 1 nM vasopressin, respectively. The dose-response curve for the initial rate of cytosolic free Ca2+ increase was very similar to those obtained for the initial rates of Ins-P3 production and PtdIns-4,5-P2 breakdown. Pretreatment of hepatocytes with Li+ caused a 3--4-fold potentiation of vasopressin-induced elevations of Ins-P, Ins-P2, and Ins-P3, with half-maximal effects at 0.5, 1, and 5 mM, respectively. The calculated maximal concentrations of Ins-P3 in cells treated with 20 nM vasopressin were 10 and 30 microM, respectively, without and with Li+. Lithium did not affect the initial rate of inositol polyphosphate production or Ca2+ mobilization. The increase of Ins-P3 which correlated with peak cytosolic free Ca2+ elevation was about 0.6 microM. In a saponin-permeabilized hepatocyte preparation, Ins-P3 (1 microM) caused Ca2+ release from a vesicular, ATP-dependent Ca2+ pool. The data presented here suggest that Ins-P3 may be a second messenger for the mobilization of intracellular Ca2+ by hormones in liver.