The biomolecular mechanisms that mediate signal transduction by type 11 (γ) interferon (IFN) are poorly understood. IFN‐γ is a potent growth inhibitory cytokine also endowed with antiviral, immunomodulatory, and differentiating activities on various cell targets, including neural cells. IFN‐γ induced a rapid and transient activation of phospholipase A2 in LAN‐5, a human neuroblastoma cell line. A consequence of phospholipase A2 activation was the release of arachidonic acid and the generation of lysophospholipids from membrane phospholipids. Treatment of pre‐labeled LAN‐5 cells with a receptor‐saturating concentration of IFN‐γ led to a time‐dependent release of [3H]arachidonic acid into the culture media and generation or [32P]lysophosphatidylcholine. Pretreatment of cultures with the phospholipase A2 inhibitor, bromophenacyl bromide, markedly inhibited both [3H]arachidonic acid release and lysophosphatidylcholine production induced by IFN‐γ treatment. Pretreatment of LAN‐5 cells with nordihydroguaiaretic acid, a lipoxygenase inhibitor, or with indomethacin, a cyclooxygenase inhibitor, amplified the release of[3H]arachidonic acid and production of lysophosphatidylcholine induced by non‐saturating concentrations of IFN‐γ. In parallel, and with the same time‐dependent effect, a significant decrease in phosphatidylcholine labeling was observed in IFN‐γ‐treated cells, further indicating that a potential signal transduction mechanism of IFN‐γ is the hydrolysis of membrane phosphatidylcholine by phospholipase A2.