Phospholipase C-gamma1 (PLC-gamma1), which interacts with a variety of signaling molecules through its two Src homology (SH) 2 domains and a single SH3 domain has been implicated in the regulation of many cellular functions. We demonstrate that PLC-gamma1 acts as a guanine nucleotide exchange factor (GEF) of dynamin-1, a 100 kDa GTPase protein, which is involved in clathrin-mediated endocytosis of epidermal growth factor (EGF) receptor. Overexpression of PLC-gamma1 increases endocytosis of the EGF receptor by increasing guanine nucleotide exchange activity of dynamin-1. The GEF activity of PLC-gamma1 is mediated by the direct interaction of its SH3 domain with dynamin-1. EGF-dependent activation of ERK and serum response element (SRE) are both up-regulated in PC12 cells stably overexpressing PLC-gamma1, but knockdown of PLC-gamma1 by siRNA significantly reduces ERK activation. These results establish a new role for PLC-gamma1 in the regulation of endocytosis and suggest that endocytosis of activated EGF receptors may mediate PLC-gamma1-dependent proliferation.