Erythropoietin (Ep) is a peptide growth factor whose actions on the erythroid progenitor cell induce both proliferation and terminal differentiation; however, the intracellular mechanisms which mediate these actions are not well characterized. In the present study, two signal transduction systems which are activated by Ep have been identified, both of which involve lipid molecules as mediators of the cellular response. In the first of these systems, Ep induces the activation of a phospholipase A2 and/or phospholipase C, which results in the liberation of arachidonic acid from one of several membrane phospholipids. The arachidonic acid is subsequently acted on by 5- and 12-lipoxygenase enzymes, causing the formation of the active metabolites, leukotriene B4 and 12-hydroperoxyeicosatetraenoic acid. Ep was shown to induce a rapid elevation in the levels of these metabolites, which could be blocked by appropriate inhibitors. These metabolites are strongly associated with the activation of further intracellular events which are required for the onset of proliferation. Inhibition of the production of these metabolites resulted in an inhibition of proliferation. The second pathway which is activated by Ep involves protein kinase C (PKC); this important intracellular signalling molecule requires activation by the lipid molecule diacylglycerol, which is also released by the actions of the phospholipase C mentioned earlier. Inhibitors of PKC will inhibit both Ep-induced proliferation and differentiation. Ep will also activate PKC in nuclei isolated from erythroid progenitor cells, suggesting the existence of signal transduction pathways in the nucleus which may be activated separately from those initiated at the cell membrane. Immunocytochemical studies have shown that the predominant isoform of PKC which is present in the nuclei as well as intact cells is the beta subtype; additionally, cells incubated with or without Ep for 24 hr show different subcellular distributions of this isoform, providing further evidence for a role for PKC in the actions of Ep. Taken together, these studies suggest an important role for lipid molecules as mediators of the intracellular actions of Ep