In the present study, the induction of the phosphoinositide signal transduction pathway by 17 beta-oestradiol has been demonstrated in rat vaginal epithelial cells (VEC). We have shown an increase in the metabolism of phosphoinositol lipids by 3H-myoinositol incorporation as well as production of inositol phosphate in VEC in vivo and in vitro following oestradiol administration. Concomitant changes in intracellular calcium levels have also been observed under the influence of oestradiol. To rule out the effects of cytokines, parallel studies were performed using primary cultures of VEC. Oestradiol-induced calcium uptake was seen even in the presence of actinomycin D and cycloheximide which inhibit transcription and translation respectively. Calcium uptake was blocked by neomycin, an inhibitor of phosphoinositol lipid metabolism, and by the oestrogen receptor antagonist tamoxifen. Results suggest that oestradiol induces second messenger pathways in the VEC through specific receptors. Implications of these observations in cellular differentiation processes are discussed.