Glycoproteins exposed on cell surfaces are commonly anchored in the membrane via hydrophobic peptide domains which penetrate the lipid bilayer. However, it has recently been appreciated that there are exceptions to this generalization and certain cell-surface proteins appear to be anchored via a specific association with phosphatidylinositol. Thy-1 glycoprotein may also be attached to cell membranes by a non-protein hydrophobic domain located at the C-terminus and although the chemical nature of this moiety has not been determined, it was postulated that it might be a lipid. On the other hand, amino-acid sequences predicted from nucleotide sequence analyses suggest that a C-terminal hydrophobic peptide segment not found in the purified, detergent-solubilized Thy-1 glycoprotein may be responsible for attachment. We report here that a highly purified phospholipase C specific for phosphatidylinositol selectively released Thy-1 from viable normal or malignant T lymphocytes. This result supports the proposed lipid nature of the Thy-1 anchoring domain and further suggests that this lipid is, or is closely related to, phosphatidylinositol.