Gelsolin and CapG are actin regulatory proteins that remodel the cytoskeleton in response to phosphatidylinositol 4,5-bisphosphate (PIP2) and Ca2+ during agonist stimulation. A physiologically relevant rise in Ca2+ increases their affinity for PIP2 and can promote significant interactions with PIP2 in activated cells. This may impact divergent PIP2- dependent signaling processes at the level of substrate availability. We found that CapG overexpression enhances PDGF-stimulated phospholipase Cgamma (PLCgamma) activity (Sun, H.-q., K. Kwiatkowska, D.C. Wooten, and H.L. Yin. 1995. J. Cell Biol. 129:147-156). In this paper, we examined the ability of gelsolin and CapG to compete with another PLC for PIP2 in live cells, in semiintact cells, and in vitro. We found that CapG and gelsolin overexpression profoundly inhibited bradykinin-stimulated PLCbeta. Inhibition occurred at or after the G protein activation step because overexpression also reduced the response to direct G protein activation with NaF. Bradykinin responsiveness was restored after cytosolic proteins, including gelsolin, leaked out of the overexpressing cells. Conversely, exogenous gelsolin added to permeabilized cells inhibited response in a dose-dependent manner. The washout and addback experiments clearly establish that excess gelsolin is the primary cause of PLC inhibition in cells. In vitro experiments showed that gelsolin and CapG stimulated as well as inhibited PLCbeta, and only gelsolin domains containing PIP2-binding sites were effective. Inhibition was mitigated by increasing PIP2 concentration in a manner consistent with competition between gelsolin and PLCbeta for PIP2. Gelsolin and CapG also had biphasic effects on tyrosine kinase- phosphorylated PLCgamma, although they inhibited PLCgamma less than PLCbeta. Our findings indicate that as PIP2 level and availability change during signaling, cross talk between PIP2-regulated proteins provides a selective mechanism for positive as well as negative regulation of the signal transduction cascade.