We have studied the effect of phospholipase C from Bacillus cereus and Clostridium perfringens (alpha-toxin) on giant stearoyl-oleoyl phosphatidylcholine (SOPC) vesicles. Enzyme activity leads to a binary mixture of SOPC and the diacylglycerol SOG, which phase separates into a SOPC-rich bilayer phase and a SOG-rich isotropic bulk-like domain embedded within the membrane, as seen directly by phase contrast microscopy. After prolonged enzymatic attack, all bilayer membranes are transformed into an isotropic pure SOG phase as characterized by fluorescence microscopy, differential scanning calorimetry, fluorescence anisotropy measurements, and small angle x-ray scattering. These domains may have biological relevance, serving as storage compartments for hydrophobic molecules and/or catalyzing cellular signaling events at their boundaries. Furthermore, in the early stages of asymmetric enzymatic attack to the external monolayer of giant vesicles, we observe a transient coupling of the second-messenger diacylglycerol to membrane spontaneous curvature, which decreases due to enzyme activity, before domain formation and final vesicle collapse occurs.