A body of evidence has shown the existence of a nuclear phosphoinositide cycle in different cell types. The cycle is endowed with kinases as well as phosphatases and phospholipase C (PLC). Among the PLC isozymes, the beta family is characterized by a long COOH-terminal tail that contains a cluster of lysine residues responsible for nuclear localization. Indeed, PLC beta 1 is the major isoform that has been detected in the nucleus of several cells. This isoform is activated by insulin-like growth factor I, and when this isoform is lacking, as a result of gene ablation, the onset of DNA synthesis induced by this hormone is abolished. On the contrary, PLC beta 1 is down-regulated during the erythroid differentiation of Friend erythroleukemia cells. A key question is how PLC beta 1 signaling at the nucleus fits into the erythroid differentiation program of Friend erythroleukemia cells, and whether PLC beta 1 signaling activity is directly responsible for the maintenance of the undifferentiated state of erythroleukemia cells. Here we present evidence that nuclear PLC beta 1 but not the isoform located at the plasma membrane is directly involved in maintaining the undifferentiated state of Friend erythroleukemia cells. Indeed, when wild-type PLC beta 1 is overexpressed in these cells, differentiation in response to DMSO is inhibited in that the expression of beta-globin is almost completely abolished, whereas when a mutant lacking the ability to localize to the nucleus is expressed, the cells differentiate, and the expression of beta-globin is the same as in wild-type cells.