Three families of phospholipase C (PI-PLCbeta, gamma, and delta) are known to catalyze the hydrolysis of polyphosphoinositides such as phosphatidylinositol 4,5-bisphosphate (PIP(2)) to generate the second messengers inositol 1,4,5 trisphosphate and diacylglycerol, leading to a cascade of intracellular responses that result in cell growth, cell differentiation, and gene expression. Here we describe the founding member of a novel, structurally distinct fourth family of PI-PLC. PLCepsilon not only contains conserved catalytic (X and Y) and regulatory domains (C2) common to other eukaryotic PLCs, but also contains two Ras-associating (RA) domains and a Ras guanine nucleotide exchange factor (RasGEF) motif. PLCepsilon hydrolyzes PIP(2), and this activity is stimulated selectively by a constitutively active form of the heterotrimeric G protein Galpha(12). PLCepsilon and a mutant (H1144L) incapable of hydrolyzing phosphoinositides promote formation of GTP-Ras. Thus PLCepsilon is a RasGEF. PLCepsilon, the mutant H1144L, and the isolated GEF domain activate the mitogen-activated protein kinase pathway in a manner dependent on Ras but independent of PIP(2) hydrolysis. Our findings demonstrate that PLCepsilon is a novel bifunctional enzyme that is regulated by the heterotrimeric G protein Galpha(12) and activates the small G protein Ras/mitogen-activated protein kinase signaling pathway.