The ability of muscarinic cholinergic receptors to activate phosphoinositide turnover following agonistinduced internalization has been investigated. Incubation of SH-SY5Y neuroblastoma cells with oxotremorine-M resulted in a time-dependent endocytosis of both muscarinic receptors and a subunits of Gq and G 11, but not of isoforms of phosphoinositide-specific phospholipase C, into a subfraction of smooth endoplasmic reticulum (V1). Agonist-induced increases in diacylglycerol mass and in 32P-phosphatidate labeling, much of which was of the tetraenoic species, were also observed in the V 1 fraction, but these increases persisted when the agonist-induced translocation of receptors into the V1 fraction was blocked. All enzymes of the phosphoinositide cycle were detectable in the V1 fraction. However, with the exception of phosphatidylinositol 4-kinase, none was enriched when compared with cell lysates. Both 32P-labeling studies and enzyme assays point to a very limited capacity of this fraction to synthesize phosphatidylinositol 4,5-bisphosphate, whereas the synthesis of phosphatidylinositol 4-phosphate is robust. These results indicate that endocytosed receptors do not appear to retain their ability to activate phosphoinositide turnover. The availability of the substrate for phospholipase C, phosphatidylinositol 4,5-bisphosphate, may be one factor that limits the activity of muscarinic receptors in this subcellular compartment. Key Words: G~q 1ii-PhosphoIipaseC isozymes-Diacylglycerol-Phosphatidylinositol 4-phosphate 5-kinase-Lipid substrate availability-Phosphatidate.