Introduction of a v-rasHa oncogene into cultured mouse keratinocytes by transduction with a defective retrovirus is sufficient to transform keratinocytes to the benign phenotype. Transduced keratinocytes overexpress TGF alpha and hyperproliferate in culture medium with 0.05 mM Ca2+. Whereas normal keratinocytes respond to elevated medium Ca2+ by cessation of proliferation and induction of terminal differentiation, v-rasHa keratinocytes are not induced to differentiate by Ca2+. We now demonstrate that v-rasHa keratinocytes have elevated basal levels of phosphatidylinositol, inositol phosphates and diacylglycerols in 0.05 mM Ca2+ medium. Basal turnover of phosphatidylcholine is not altered by the rasHa oncogene. The generation of inositol phosphates is even further stimulated in v-rasHa cells by an increase in extracellular Ca2+ or by exposure to aluminum fluoride. Thus, the v-rasHa gene product does not stimulate the inositol phospholipid pathway maximally and additional phosphatidylinositol is available for turnover in response to inducers of phospholipase C activity. TGF alpha and medium conditioned by v-rasHa keratinocytes, both of which stimulate proliferation of normal cells in 0.05 mM Ca2+, transiently increased phosphatidylinositol turnover in normal keratinocytes but did not inhibit Ca(2+)-induced terminal differentiation. In contrast, sustained elevation in basal phosphatidylinositol metabolism was produced by aluminum fluoride. Combined exposure to aluminum fluoride and exogenous TGF alpha caused hyperproliferation, resistance to Ca(2+)-induced differentiation and morphological changes identical to those of v-rasHa keratinocytes. These results provide a link between the biological consequences of v-rasHa gene expression and biochemical changes which are known to alter the keratinocyte phenotype.