Many lipids or lipid-derived products generated by phospholipases acting on phospholipids in membranes are implicated as mediators and second messengers in signal transduction. Our current understanding of the primary sequence relationships within the class of extracellular phospholipase A2's and among the numerous forms of the mammalian phosphatidylinositol-specific phospholipase C's is reviewed. New results suggesting roles for these phospholipases as well as other phospholipases such as phospholipase C and D acting on phosphatidlycholine in generating arachidonic acid for eicosanoid biosynthesis, inositol phosphates for Ca2+ mobilization, and diglyceride for protein kinase C activation through receptor-mediated processes, are discussed. In addition, the possible role of phospholipases acting on sphingolipids such as sphinglomyelinase in generating lipid mediators is considered.