The regulation of the two isoforms of phospholipase C-gamma, PLC gamma(1) and PLC gamma(2), by cell surface receptors involves protein tyrosine phosphorylation as well as interaction with adapter proteins and phosphatidylinositol 3,4,5-trisphosphate (PtdInsP(3)) generated by inositol phospholipid 3-kinases (PI3Ks). All three processes may lead to recruitment of the PLC gamma isozymes to the plasmamembrane and/or stimulation of their catalytic activity. Recent evidence suggests that PLC gamma may also be regulated by Rho GTPases. In this study, PLC gamma(1) and PLC gamma(2) were reconstituted in intact cells and in a cell-free system with Rho GTPases to examine their influence on PLC gamma activity. PLC gamma(2), but not PLC gamma(1), was markedly activated in intact cells by constitutively active Rac1(G12V), Rac2(G12V), and Rac3(G12V) but not by Cdc42(G12V) and RhoA(G14V). The mechanism of PLC gamma(2) activation was apparently independent of phosphorylation of tyrosine residues known to be modified by PLC gamma(2)-activating protein-tyrosine kinases. Activation of PLC gamma(2) by Rac2(G12V) in intact cells coincided with a translocation of PLC gamma(2) from the soluble to the particulate fraction. PLC gamma isozyme- specific activation of PLC gamma(2) by Rac GTPases (Rac1 approximate to Rac2 > Rac3), but not by Cdc42 or RhoA, was also observed in a cell-free system. Herein, activation of wild-type Rac GTPases with guanosine 5'-(3-O-thio)triphosphate caused a marked stimulation of PLC gamma(2) but had no effect on the activity of PLC gamma(1). PLC gamma(1) and PLC gamma(2) have previously been shown to be indiscriminately activated by PtdInsP(3) in vitro. Thus, the results suggest a novel mechanism of PLC gamma(2) activation by Rac GTPases involving neither protein tyrosine phosphorylation nor PI3K-mediated generation of PtdInsP(3).