Insulin binding to plasma membrane receptors results in the generation of substances that acutely mimic the actions of the hormone on certain target enzymes. Two such substances, which modulate the activity of the high-affinity cAMP phosphodiesterase (EC 3.1.4.17), have been purified from hepatic plasma membranes. The two have similar properties and activities but can be resolved by ion-exchange chromatography and high-voltage electrophoresis. They exhibit a net negative charge, even at pH 1.9, and an apparent molecular weight of approximately 1400. The generation of these substances from membranes by insulin can be reproduced by addition of a phosphatidylinositol-specific phospholipase C purified from Staphylococcus aureus. This enzyme is known to selectively hydrolyze phosphatidylinositol and release from membranes several proteins that are covalently linked to phosphatidylinositol by a glycan anchor. Both enzyme-modulating substances appear to be generated by the phosphodiesterase cleavage of a phosphatidylinositol-containing glycolipid precursor that has been characterized by thin-layer chromatography. Some of the chemical properties of these substances have been examined. They appear to be related complex carbohydrate-phosphate substances containing glucosamine and inositol. These findings suggest that insulin may activate a selective phospholipase activity that hydrolyzes a membrane phospholipid, releasing a carbohydrate-containing molecule that regulates cAMP phosphodiesterase and perhaps other insulin-sensitive enzymes.