The hydrolysis of inositol [ 3 2 P]trisphosphate (IP 3 ) and inositol [ 3 2 P]bisphosphate (IP 2 ) has been examined in subcellular fractions of rat liver. IP 3 was degraded by an enzyme located in the plasma membrane which did not degrade IP 2 . Cytosolic fractions were found to degrade both IP 3 and IP 3 . The IP 3 phosphatase activity of liver plasma membranes displayed a neutral pH optimum, was Mg 2 + dependent and was not inhibited by high concentrations of Li + . Half-maximal activity of the enzymes hydrolysing IP 3 and IP 2 was obtained with substrate concentrations in the range 1-2μM. The significance of these observations to the proposed Ca 2 + -mobilizing role of IP 3 is discussed.