Protein kinase C (PKC), a Ca2+-and phospholipid-dependent protein kinase, is now known to be regulated by sn-1,2-diacylglycerol (DAG) second messengers and is the intracellular phorbol ester receptor. Models of transmembrane signaling events that elicit DAG production include receptor-mediated G protein-dependent activation of phospholipase C. Several products of oncogenes resemble transmembrane signaling elements; critical second-messenger levels may, therefore, be altered by genetic defects in these elements. We found that normal rat kidney cells transformed with ras and sis contained elevated levels of DAG, and cells transformed with temperature-sensitive K-ras had elevated DAG levels at the permissive but not the restrictive temperature. To study the mechanism of PKC activation by phosphatidylserine (PS), DAG, and Ca2+, we used mixed micelles of Triton X-100, and analogous methods to examine PS dependence on [3H]phorbol-dibutyrate binding and activation. PKC activation occurs at physiological mole fractions of PS and DAG and does not require a bilayer. Activation by PS, which was cooperative, required four or more molecules. Activation by DAG was not cooperative and one molecule was sufficient. Monomeric PKC is the active species. Our activation model suggests that PKC binds to Ca2+ and four PS carboxyl groups to form a surface-bound, "primed" but inactive complex. DAG binds to the complex of the four PS carboxyl groups, the Ca2+, and the PKC through three bonds, two to ester carbonyls and one to the 3-hydroxyl moiety. Collectively, these may cause a conformational change and activate the enzyme.