Monomeric vanadate is a potent competitive inhibitor of phospholipase C from Bacillus cereus, much better than other oxyanions (e.g., phosphate or iodate). The apparent efficiency of inhibition depends on the substrate aggregate structure. The measured inhibition constant with respect to monomeric phosphatidylcholine substrate is 0.21 mM under conditions where the K-m is 0.12 mM; for micellar substrate the apparent K-i appears much lower and in fact tracks the apparent K-m which decreases 10-fold. Vandate inhibition is removed by addition of exogenous diacylglycerol, which by itself is an inhibitor. In constrast to its effect with monomeric or micellar substrate, vanadate does not strongly inhibit the PLC-catalyzed hydrolysis of small unilamellar vesicles of phosphatidylcholine. These results are interpreted in terms of the surface binding of the enzyme. Because of its ability to mimic the transition state of phosphate ester hydrolysis vanadate is also used to investigate the constraints on the occurrence of strained cyclic intermediates in phospholipid hydrolysis by PLC.