The whole cell recording technique was used to examine an outwardly rectifying chloride current activated by hypotonic shock in bovine pigmented ciliary epithelial (PCE) cells. Removal of internal and external Ca2+ did not affect the activation of these currents, but they were abolished by the phospholipase C inhibitor neomycin. The current was blocked by 5-nitro-2-(3-phenylpropylamino)benzoic acid, 4-acetamido-4'-isothiocyanostilbene-2,2'-disulfonic acid, and 4,4'-disothiocyanostilbene-2,2'-disulfonic acid (DIDS) in a voltage-dependent manner, but tamoxifen, dideoxyforskolin, and quinidine did not affect it. This blocking profile differs from that of the volume-sensitive chloride channel in neighboring nonpigmented ciliary epithelial cells (Wu, J., J. J. Zhang, H. Koppel, and T. J. C. Jacob, J. Physiol, Lond. 491: 743-755, 1996), and this difference implies that the volume responses of the two cell types are mediated by different chloride channels (Jacob, T. J. C., and J. J. Zhang. J. Physiol. Lond. In press). Intracellular administration of guanosine 5'-O-(3-thiotriphosphate) (GTP gamma S) to PCE cells induced a transient, time-independent, outwardly rectifying chloride current that closely resembled the current activated by hypotonic shock. DIDS produced a voltage-dependent block of the GTP gamma S-activated current similar to the block of the hypotonically activated current. Intracellular neomycin completely prevented activation of this current as did incubation of the cells in calphostin C. and inhibitor of protein kinase C (PKC). Removal of Ca2+ did not affect activation of the current by GTP gamma S but extended the duration of the response. Inhibition of phospholipase A2 (PLA2) with p-bromophenacyl bromide prevented the activation of the hypotonically induced current and also inhibited the current once activated by hypotonic solution. The findings imply that the hypotonic response in PCE cells is mediated by both phospholipase C (PLC) and PLA2. Both phospholipases generate arachidonic acid, and, in addition, the PLC pathway regulates the PLA2 pathway via a PKC-dependent phosphorylation of PLA2.