We have shown earlier that the 12-lipoxygenase product of arachidonic acid (AA), 12-hydroxyeicosat etraenoic acid (12-HETE), plays an important role in mediating angiotensin II (AII)-induced aldosterone secretion (J. Clin. Invest. (1987) 80, 1763). In the present study, we have evaluated whether diacylglycerol (DG) is the source of arachidonic acid giving rise to this 12-HETE. Treatment of rat adrenal glomerulosa cells with a DG lipase inhibitor, RHC 80267, which prevents conversion of DG to AA and HETEs, blocked All-induced aldosterone and 12-HETE formation. In contrast, a DG kinase inhibitor, R59022, which prevents conversion of DG to phosphatidic acid, potentiated All-induced aldosterone and 12-HETE formation. These two inhibitors block DG metabolism which would be expected to lead to increased DG levels and protein kinase C activity and All-induced steroidogenesis. However, only R59022 potentiated All action while RHC 80267 was inhibitory. This suggests that conversion of DG to AA and 12-HETE is important for All action. Further proof for this was obtained by measuring [3H]AA-labeled DG levels. The combination of the inhibitors significantly potentiated All-induced DG formation even though this same combination was inhibitory on All-induced aldosterone and 12-HETE. Thus, the inhibitory effect of RHC 80267 is due to blockade of AA release and not of DG formation. These results suggest that DG plays a dual role in All action, both as an activator of protein kinase C and as a source of AA for 12-HETE formation. © 1990.