Polyphosphoinositide-specific phospholipases (PICs) of the delta-subfamily are ubiquitous in eukaryotes, but an inability to control these enzymes physiologically has been a major obstacle to understanding their cellular function(s). Plc1p is similar to metazoan delta-PICs and is the only PIC in Saccharomyces cerevisiae. Genetic studies have implicated Plc1p in several cell functions, both nuclear and cytoplasmic. Here we show that a brief hypo-osmotic episode provokes rapid Plc1p-catalyzed hydrolysis of PtdIns(4,5)P2 in intact yeast by a mechanism independent of extracellular Ca2+. Much of this PtdIns(4,5)P2 hydrolysis occurs at the plasma membrane. The hydrolyzed PtdIns(4,5)P2 is mainly derived from PtdIns4P made by the PtdIns 4-kinase Stt4p. PtdIns(4,5)P2 hydrolysis occurs normally in mutants lacking Arg82p or Ipk1p, but they accumulate no InsP6, showing that these enzymes normally convert the liberated Ins(1,4,5)P3 rapidly and quantitatively to InsP6. We conclude that hypo-osmotic stress activates Plc1p-catalyzed PtdIns(4,5)P2 at the yeast plasma membrane and the liberated Ins(1,4,5)P3 is speedily converted to InsP6. This ability routinely to activate Plc1p-catalyzed PtdIns(4,5)P2 hydrolysis in vivo opens up new opportunities for molecular and genetic scrutiny of the regulation and functions of phosphoinositidases C of the delta-subfamily.