The leukotriene, LTC4, exerts a stimulatory effect on chloride transport in the frog cornea. In the work described here, the mechanism of action of LTC4 to stimulate chloride transport was studied. In corneas pretreated with indomethacin, the effect of LTC4 was abolished, suggesting the involvement of cyclo-oxygenase products in the response. Incubation of corneas with LTC4 resulted in a significant stimulation in PGE2 synthesis, as determined by TLC-autoradiography and radioimmunoassay. In addition, LTC4 was found to stimulate cAMP synthesis in the cornea, and this stimulation was blocked with indomethacin. PGE2 was previously shown by us to be the dominant cyclo-oxygenase product formed in the frog cornea, and is capable of stimulating cAMP and chloride transport. We suggest that LTC4 stimulation of chloride transport is mediated via activation of the cyclo-oxygenase pathway, resulting in enhanced PGE2 synthesis. Elevated PGE2 levels induce cAMP synthesis, and ultimately, the stimulation of chloride transport. Further, the activation of cyclo-oxygenase was found to be dependent on phospholipase A2 activity. This was shown by the inhibition of the LTC4 effect in the presence of quinacrine. Similarly, inhibition of the LTC4 effect in the presence of trifluoperazine suggests that cyclo-oxygenase activation by LTC4 may be mediated via calmodulin. We have previously demonstrated that the frog cornea has the biosynthetic capacity to produce LTC4. Therefore LTC4 may function as an endogenous regulator of chloride transport in this tissue.