Phospholipase C-gamma (PLC-gamma) isozymes are thought to be activated by receptor-induced tyrosine phosphorylation. Proteins that activate PLC-gamma1 have now been purified from bovine brain and identified as members of the tau family of microtubule-associated proteins. Activation of PLC-gamma by tau was enhanced in the presence of unsaturated fatty acids such as arachidonic acid, saturated fatty acids being ineffective. Maximal (15-20-fold) activation was apparent in the presence of 0.15 microM tau and 25 microM arachidonic acid (AA). The effect of tau and AA was specific to PLC-gamma isozymes in the presence of submicromolar concentrations of Ca2+ and was markedly inhibited by phosphatidylcholine. These results suggest that in cells that express tau, receptors coupled to cytosolic phospholipase A2 may activate PLC-gamma isozymes indirectly in the absence of tyrosine phosphorylation through the hydrolysis of phosphatidylcholine to generate AA.