The muscarinic agonist carbachol stimulates a rapid increase in ^32Pi incorporation into phosphatidic acid (PA) and phosphatidylinositol (PI) in calcium tolerant myocytes prepared from heart tissue. The density of muscarinic receptors, determined by [^3H]-QNB binding, is greater in the atria than in the ventricles. 250 uM carbachol decreased specific [^3H]-QNB binding to muscarinic receptors on myocyte membranes by fifty percent. Trifluoperazine, also a phospholipase C inhibitor, inhibited the carbachol stimulated increase in ^32Pi incorporation into PA and PI and did not interfere with muscarinic receptor binding. Therefore, isolated canine myocytes provide a suitable model system to further study the muscarinic receptor stimulated phospholipid effect, and its role in mediating biochemical processes and physiological function in the heart.