Protein kinase C is activated by the simultaneous presence of phospholipid, a diglyceride, and Ca2+. Under physiological conditions the activity of the enzyme is regulated by the availability of diglycerides, which are the products of phosphoinositide hydrolysis. The phospholipid‐kinase interactions appear not to be of a highly specific nature. Phosphatidylserine (PS) is presumed to be the endogenous lipid that interacts with the kinase, but other acidic lipids can substitute. On the other hand, the kinase‐diglyceride interactions are highly specific in nature, as would be expected of a physiological regulator. These interactions are stereospecific and stoichiometric with respect to diglyceride. The specificity is directed toward the glycerol backbone and hydrophilic oxygen moieties of the diglyceride. The removal of one or more of the oxygen atoms or the addition of a single methyl group to the glycerol backbone virtually abolishes the activity of a putative diglyceride activator. The extreme specificity of the kinase toward the diglycerides, however, must be contrasted with the abilities of structurally diverse tumor promotors and irritants to activate the kinase. Specific small‐molecule antagonists of protein kinase C have yet to be developed. The small‐molecule antagonists that have been developed so far have been relatively nonspecific cationic lipids that appear to function by interfering with the interaction between the acidic phospholipids and Ca2+.— Rando, R. R. Regulation of protein kinase C activity by lipids.FASEB J.2: 2348‐2355; 1988.