Phospholipase C-␥ (PLC-␥) isozymes are thought to be activated by receptor-induced tyrosine phosphorylation. Proteins that activate PLC-␥1 have now been purified from bovine brain and identified as members of the tau family of microtubule-associated proteins. Activation of PLC-␥ by tau was enhanced in the presence of unsaturated fatty acids such as arachidonic acid, saturated fatty acids being ineffective. Maximal (15-20-fold) activation was apparent in the presence of 0.15 M tau and 25 M arachidonic acid (AA). The effect of tau and AA was specific to PLC-␥ isozymes in the presence of submicromolar concentrations of Ca 2؉ and was markedly inhibited by phosphatidylcholine. These results suggest that in cells that express tau, receptors coupled to cytosolic phospholipase A 2 may activate PLC-␥ isozymes indirectly in the absence of tyrosine phosphorylation through the hydrolysis of phosphatidylcholine to generate AA.The hydrolysis of a minor membrane phospholipid, phosphatidylinositol 4,5-bisphosphate (PIP 2 ), 1 by a specific phospholipase C (PLC) is one of the earliest key events in the regulation of cellular function by more than 100 different extracellular signaling molecules (reviewed by Noh et al. (1995)). This reaction generates two intracellular messengers: inositol 1,4,5-trisphosphate (IP 3 ), which induces the release of Ca 2ϩ from internal stores, and diacylglycerol, which activates protein kinase C.Ten mammalian isoforms of PLC have been identified to date, and these can be divided into  type (PLC-1, -2, -3, and -4), ␥ type (PLC-␥1 and -␥2), and ␦ type (PLC-␦1, -␦2, -␦3, and -␦4) enzymes on the basis of amino acid sequence (Noh et al., 1995). The distinct structural features of the different PLC types have been related to specific mechanisms of receptormediated enzyme activation. Thus, PLC-␥ isozymes are activated by tyrosine phosphorylation, and PLC- isozymes are activated by heterotrimeric G proteins (Noh et al., 1995); the mechanism of PLC-␦ isozyme activation is not known.PLC hydrolyzes phosphatidylinositol (PI) and phosphatidylinositol 4-phosphate as well as the physiological substrate, PIP 2 , in vitro, with PI-hydrolyzing activity often measured during PLC purification. While purifying PLC-␥1, the most abundant PLC isoform in brain cytosol, we observed that the PI-hydrolyzing activity of crude brain cytosol decreased more than expected on dilution. Furthermore, addition of crude cytosol to purified PLC-␥1 markedly enhanced PI-hydrolyzing activity. These observations suggested that brain cytosol contains a component that can enhance the activity of PLC-␥1 toward PI.We now describe the purification of this activator and its identification as the microtubule-associated protein tau. We also show that tau enhances the activity of PLC-␥1 toward PIP 2 to a markedly lesser extent than that apparent with PI and that the effect of tau on PLC-␥ activity toward PIP 2 is greatly increased in the presence of arachidonic acid (AA). Of the three types of PLC, the ␥ type isozymes are most sensitive to activ...