The inositol lipid phosphatidylinositol (4,5)-bisphosphate [PtdIns(4,5)P-2] is involved in a myriad of cellular processes, including the regulation of exocytosis and endocytosis. In this paper, we address the role of PtdIns( 4,5) P2 in compound exocytosis from rat peritoneal mast cells. This process involves granule-plasma membrane fusion as well as homotypic granule membrane fusion and occurs without any immediate compensatory endocytosis. Using a novel quantitative immunofluorescence technique, we report that plasma membrane PtdIns( 4,5) P-2 becomes transiently depleted upon activation of exocytosis, and is not detected on the membranes of fusing granules. Depletion is caused by phospholipase C activity, and is mandatory for exocytosis. Although phospholipase C is required for Ca2+ release from internal stores, the majority of the requirement for PtdIns( 4,5) P-2 hydrolysis occurs downstream of Ca2+ signalling - as shown in permeabilised cells, where the inositol ( 1,4,5)- trisphosphate-Ca2+ pathway is bypassed. Neither generation of the PtdIns( 4,5) P-2 metabolite, diacylglycerol (DAG) or simple removal and/or sequestration of PtdIns( 4,5) P-2 are sufficient for exocytosis to occur. However, treatment of permeabilised cells with DAG induces a small potentiation of exocytosis, indicating that it may be required. We propose that a cycle of PtdIns( 4,5) P-2 synthesis and breakdown is crucial for exocytosis to occur in mast cells, and may have a more general role in all professional secretory cells.