Phospholipase D, which hydrolyzes phospholipids (primarily phosphatidylcholine) to generate phosphatidic acid, has emerged as a critical component in cellular signal transduction. Research during the past year has confirmed and extended the view that phosphatidic acid and its dephosphorylated product, sn-1,2-diacylglycerol, are important intracellular second messengers and that the coupling of phospholipase D to specific receptors occurs through multiple mechanisms involving protein kinase C, protein tyrosine kinase, Ca2+ and GTP-binding proteins.