The effect of the addition of several phospholipids (lysophosphatidylcholine, alpha-lecithin, phosphatidylserine, phosphatidylethanolamine, lysophosphatidyl-ethanolamine, sphingomyelin, and disphosphatidylglycerol and phosphatidic acid) and related compounds (glycerophosphocholine, alpha- and beta-glycerophosphate, choline, serine, glycerol, dipalmitoylglycerol, and stearic acid) on the ability of purified (from beef pancreas) and microsomal (rat liver) glutathione-insulin transhydrogenase (Glutathione:protein-disulphide oxidoreductase, EC 1.8.4.2) to degrade insulin has been examined. With purified enzyme, except for phosphatidic acid and phosphatidylserine, all other phospholipids tested caused a slight activation at low concentration with phosphatidylethanolamine causing the highest activation. Lysophosphatidylcholine and phosphatidic acid are the only agents which cause inhibition of activity. The reaction rate as a function of concentration of inhibitor is hyperbolic for phosphatidic acid ([I]0.5 = 25 muM) and biphasic for lysophosphatidylcholine ([I]0.5 = 270 muM). Kinetic studies show that the two phospholipids are noncompetitive versus both substrates (insulin and GSH). Further, the structures of the phospholipids are quite different from the substrates and products of the reaction catalyzed by the enzyme. These dats, together with the data obtained with microsomes (see below), support the possibility that phospholipids, in particular lysolecithin and phosphatidic acid, might function by an interaction at an allosteric site or sites to bring about a conformational change in the enzyme. With a microsomal fraction, four phospholipids (lysophosphatidylcholine, lysophosphatidylethanolamine, phosphatidylethanolamine, and phosphatidic acid) caused an increase in GSH-insulin transhydrogenase activity. At low concentration the addition of each of these phospholipids led to a 2.5-fold increase in GSH-insulin transhydrogenase activity. At higher concentration, lysophosphatidylcholine almost totally inhibited the microsomal GSH-insulin transhydrogenase activity, as it did with purified enzyme, while phosphatidic acid showed only a slight inhibition, in contrast to its effect on purified enzyme. With the microsomal fraction in which GSH-insulin transhydrogenase activity had been previously unmasked by Triton X-100 treatment, the addition of small amounts of lysophosphatidylcholine and phosphatidic acid produced, as expected, only slight increase in the transhydrogenase activity for both phospholipids; again, only lysophosphatidylcholine but not phosphatidic acid caused inhibition when higher levels were used. It is concluded that the four phospholipids and Triton X-100 increase the GSH-insulin transhydrogenase activity in the microsomes by unmasking the catalytic site without fully unmasking the allosteric site, the point of reaction with the phosphatidic acid.