1. The relationship between muscarinic receptor-mediated phosphatidylinositol 4,5-bisphosphate (PIP2) breakdown and the increase of intracellular Ca2+ ([Ca2+])i has been examined in canine cultured tracheal smooth muscle cells (TSMCs). 2. Addition of acetylcholine (ACh) and carbachol led to a 2-3 fold increase in [Ca2+]i over the resting level as determined by fura-2, with half-maximal stimulation (EC50) obtained at concentrations of 97 and 340 nM, respectively. Addition of the partial agonist, bethanechol, showed a smaller increase in PIP2 turnover and [Ca2+]i than did ACh or carbachol. 3. Addition of ACh or carbachol to TSMCs that had been prelabelled with [3H]-inositol led to the rapid (5-15 s) release of inositol mono, bis and trisphosphates IP1, IP2 and IP3. The time course of IP3 accumulation is correlated with the time course of the peak rise in [Ca2+]i. 4. Inclusion of EGTA lowered the resting [Ca2+]i and markedly reduced the extent of the agonist-induced rise in [Ca2+]i. When assayed under conditions similar to those used for the [Ca2+]i measurements, EGTA reduced the muscarinic agonist-stimulated inositol phosphates (IPs) accumulation. Conversely, ionomycin could stimulate IPs accumulation and elevate [Ca2+]i. The addition of Ca2+ (2.7-617 nM) to digitonin-permeabilized TSMCs directly stimulated IPs accumulation. 5. Both Ca2+ and guanosine-5'-O-(3-thiotriphosphate) (GTP gamma S) stimulated the formation of IPs in digitonin-permeabilized TSMCs prelabelled with [3H]-inositol. A further calcium-dependent increase in IPs accumulation was obtained by inclusion of either GTP gamma S or carbachol. The combined presence of carbachol and GTP gamma S elicited a synergistic effect on IPs accumulation, with half-maximal stimulation observed at approximately 8 nM free Ca2+.6. These results indicate that (i) the magnitude of the initial rise in [Ca2+], is directly related to the production of IPs and (ii) the phospholipase C-mediated PIP2 breakdown in TSMCs is sensitive to regulation by physiologically relevant concentrations of free Ca2+ ([Ca2+]f).