The translocation of fluorescently tagged PLC gamma and requirements for this process in cells stimulated with EGF were analyzed using real time fluorescence microscopy applied for the first time to monitor growth factor receptor--effector interactions. The translocation of PLC gamma to the plasma membrane required the functional Src homology 2 domains and was not affected by mutations in the pleckstrin homology domain or inhibition of phosphatidylinositol (PI) 3-kinase. An array of domains specific for PLC gamma isoforms was sufficient for this translocation. The dynamics of translocation to the plasma membrane and redistribution of PLC gamma, relative to localization of the EGF receptor and PI 4,5-biphosphate (PI 4,5-P(2)), were shown. Colocalization with the receptor was observed in the plasma membrane and in membrane ruffles where PI 4,5-P(2) substrate could also be visualized. At later times, internalization of PLC gamma, which could lead to separation from the substrate, was observed. The data support a direct binding of PLC gamma to the receptor as the main site of the plasma membrane recruitment. The presence of PLC gamma in membrane structures and its access to the substrate appear to be transient and are followed by a rapid incorporation into intracellular vesicles, leading to downregulation of the PLC activity.