Phospholipase D from Streptomyces chromofuscus hydrolyzes lysophosphatidylcholine or lysophosphatidylethanolamine in aqueous 1% Triton X-100 solution. In situ monitoring of this reaction by 31P NMR revealed the formation of cyclic lysophosphatidic acid (1-acyl 2,3-cyclic glycerophosphate) as an intermediate which was hydrolyzed further by the enzyme at a functionally distinct active site to lysophosphatidic acid (lyso-PA). Synthetic cyclic lyso-PA (1-octanoyl 2,3-cyclic glycerophosphate) was found to be stable in aqueous neutral solutions at room temperature. It was hydrolyzed by the bacterial phospholipase D to lyso-PA at a rate which was approximately 4-fold slower than the rate of formation of cyclic lyso-PA. The addition of 5-10 mM sodium vanadate could partially inhibit the ring opening reaction and thus increase substantially the cyclic lyso-PA accumulation. Cyclic lyso-PA may act as a dormant configuration of the physiologically active lyso-PA or may even possess specific activities which await verification.