To elucidate the mode of action of AC-3579, a diazafluoranthen derivative, the effects of the drug were tested, in incubations with rat liver homogenates on three phospholipases: the endogenous microsomal phospholipase A and the exogenous phospholipases A2 and C. The rates of hydrolysis of phosphatidylcholine and phosphatidylethanolamine, the main liver phospholipids, were significantly decreased in liver of treated animals. This inhibition was more marked in experiments with exogenous phospholipase A than with phospholipase C. For phospholipid the difference observed may be due to the decrease in activity of endogenous phospholipase A in livers of treated rats. On the other hand, the addition to the incubation media of AC-3579 or of homogenates of AC-3579-treated rat livers did not modify the action of the three phospholipases on phospholipids from normal rat liver homogenates. It is concluded that AC-3579 forms with the hydrophobic moiety of the phospholipids of smooth endoplasmic reticulum a reversible complex less accessible to the activity of phospholipase A. This mechanism accounts for the decrease in phospholipid catabolism, previously observed in vivo, which leads to hypertrophy of smooth endoplasmic reticulum and to the formation of lamellate cytosomes.