It has been suggested that sphingoid bases may serve as physiologic inhibitors of protein kinase C. Because 1,2-diacylglycerols, but not phorbol esters, enhance sphingomyelin degradation via a sphingomyelinase in GH3 pituitary cells (Kolesnick, R. N. (1987) J. Biol. Chem. 262, 16759-16762), the effects of phorbol esters, 1,2-diacylglycerols, and sphingomyelinase on protein kinase C activation were assessed. Under basal conditions, the inactive cytosolic form of protein kinase C predominated. 1,2-Diacylglycerols stimulated transient protein kinase C redistribution to the membrane. 1,2-Dioctanoylglycerol (200 micrograms/ml) reduced cytosolic protein kinase C activity to 67% of control from 72 to 48 pmol.min-1.10(6) cells-1 and enhanced membrane-bound activity to 430% of control from 6 to 25 pmol.min-1.10(6) cells-1 after 4 min of stimulation. Thereafter, protein kinase C activity returned to the cytosol. In contrast, the phorbol ester, 12-O-tetradecanoylphorbol-13-acetate (TPA), stimulated redistribution to the membrane without return to the cytosol. Exogenous sphingomyelinase reduced membrane-bound protein kinase C activity to 30% of control, yet did not alter cytosolic activity. Sphingomyelinase, added after phorbol ester-induced redistribution was completed, restored activity to the cytosol. In these studies, TPA (10(-8) M) reduced cytosolic activity to 62% of control and elevated membrane-bound protein kinase C activity to 650% of control. Sphingomyelinase restored cytosolic activity to 84% of control and reduced membrane-bound activity to 297% of control. Similarly, the free sphingoid bases, sphingosine, sphinganine, and phytosphingosine, reversed phorbol ester-induced protein kinase C redistribution. Since 1,2-diacylglycerols activate a sphingomyelinase and sphingomyelinase action can reverse protein kinase C activation, these studies suggest that a pathway involving a sphingomyelinase might comprise a physiologic negative effector system for protein kinase C. Further, the failure of phorbol esters to activate this system might account for some differences between these agents.