Phospholipase C-gamma1 (PLC-gamma1) hydrolyzes phosphatidylinositol 4,5-bisphosphate to the second messengers inositol 1,4,5-trisphosphate and diacylglycerol (DAG). PLC-gamma1 is implicated in a variety of cellular signalings and processes including mitogenesis and calcium entry. However, numerous studies demonstrate that the lipase activity is not required for PLC-gamma1 to mediate these events. Here, we report that the phospholipase activity of PLC-gamma1 plays an essential role in nerve growth factor (NGF)-triggered Raf/MEK/MAPK pathway activation in PC12 cells. Employing PC12 cells stably transfected with an inducible form of wild-type PLC-gamma1 or lipase inactive PLC-gamma1 with histidine 335 mutated into glutamine in the catalytic domain, we show that NGF provokes robust activation of MAP kinase in wild-type but not in lipase inactive cells. Both Ras/C-Raf/MEK1 and Rap1/B-Raf/MEK1 pathways are intact in the wild-type cells. By contrast, these signaling cascades are diminished in the mutant cells. Pretreatment with cell permeable DAG analog 1-oleyl-2-acetylglycerol rescues the MAP kinase pathway activation in the mutant cells. These observations indicate that the lipase activity of PLC-gamma1 mediates NGF-regulated MAPK signaling upstream of Ras/Rap1 activation probably through second messenger DAG-activated Ras and Rap-GEFs.