Lysophosphatidylinositol has been previously shown to stimulate cell proliferation in differentiated and in K-ras transformed thyroid cells. Increased levels of lysophosphatidylinositol, but not lysophosphatidylcholine or lysophosphatidylethanolamine, are present in thyroid as well as in other ras-transformed cell lines. We have now investigated the mechanism of action of this lysolipid by analysing its effects in a differentiated thyroid cell line. Lysophosphatidylinositol did not increase the levels of cAMP, the main stimulator of cell proliferation in the thyroid, whereas it stimulated phosphoinositide breakdown, mobilization of cytosolic Ca2+ and arachidonic acid release, suggesting that it activates both phospholipases C and A2. None of the effects of lysophosphatidylinositol were prevented by pretreatment of cells with pertussis toxin. Instead, the tyrosine kinase inhibitors, tyrphostins AG18 and AG561, completely blocked its mitogenic action. The effects of lysophosphatidylinositol were distinguishable from those of the well known mitogen lysophosphatidic acid, which affected differently the signalling pathways analysed and was not mitogenic in ras-transformed cells. These results suggest that the mitogenic activity of lysophosphatidylinositol is associated with the activation of phospholipase C and phospholipase A2 and is relatively specific for ras-transformed cells.