In the presence of arginine vasopressin (AVP), somatostatin increases [Ca2+](i), leading to a transient increase in insulin release from clonal beta cells HIT-T15 via G(i/o) and phospholipase C (PLC) pathway (Cheng et al., 2002a). The present study was to elucidate the mechanisms underlying somatostatin-induced [Ca2+](i) increase in the presence of AVP. We found that the effect of somatostatin was mediated by beta gamma subunits but not by the alpha subunit of G(i/o). Because somatostatin alone failed to increase [Ca2+](i), we hypothesized that somatostatin increases phosphatidylinositol 4,5-bisphosphate (PIP2) synthesis, providing extra substrate for preactivated PLC-beta to generate inositol 1,4,5-trisphosphate (IP3). Somatostatin alone did not increase IP3 levels, but AVP + somatostatin did. Somatostatin increased PIP2 levels but decreased phosphatidylinositol 4-phosphate levels. We further hypothesized that PLD mediates somatostatin-induced changes in PIP2 levels. Both the phospholipase D (PLD) inhibitors and antibody versus PLD1 antagonized AVP-somatostatin-induced increases in [Ca2+](i). PLD inhibitor also antagonized somatostatin-induced increase in PIP2 levels. In addition, somatostatin increased PLD activity. These results suggest that activation of somatostatin receptors that are coupled to the beta gamma dimer of G(i/o) led to PLD1 activation, thus promoting the synthesis of phosphatidic acid. Phosphatidic acid activates PIP-5 kinase, which evokes an increase in PIP2 synthesis. The PIP2 generated by somatostatin administration increases substrate for preactivated phospholipase C-beta, which hydrolyzes PIP2 to form IP3, leading to an increase in [Ca2+](i). The regulation of PIP2 synthesis by G(i/o)-coupled receptors via PLD activation represents a novel signaling mechanism for somatostatin and a novel concept in the cross-talk between G(q)- and G(i/o)-coupled receptors in beta cells.