We have previously demonstrated that phospholipase C (PLC)-gamma 1 is required for calcium-induced human keratinocyte differentiation. In the present study, we investigated whether the activation of PLC-gamma 1 by nonreceptor kinases such as src and fyn plays a role in mediating this process. Our results showed that the combination of dominant negative src and fyn blocked calcium-stimulated PLC-gamma 1 activity and human keratinocyte differentiation, whereas each separately has little effect. However, unlike the activation of PLC-y1 by epidermal growth factor, calcium-induced activation of PLC-y1 was not a result of direct tyrosine phosphorylation. Therefore, we examined an alternative mechanism, in particular phosphatidylinositol 3,4,5-triphosphate (PIP3) formed as a product of phosphatidylinositol 3-kinase (PI3K) activity. PIPS binds to and activates PLC-y1. The combination of dominant negative src and fyn blocked calcium-induced tyrosine phosphorylation of the regulatory subunit of PI3K, p85, and the activity of the catalytic subunit of PI3K. PI3K inhibitors blocked calcium activation of PLC-y1 as well as the induction of keratinocyte differentiation markers involucrin and transglutaminase. These data indicate that calcium activates PLC-gamma 1 via increased PIP3 formation mediated by c-src- and fyn-activated PI3K. This activation is required for calcium-induced human keratinocyte differentiation.