We report the synthesis of fluorescent 11-mercaptoundecanoic acid-gold nanodot-liposome (11-MUA-Au ND/Lip) hybrids by incorporation of gold nanoparticles (∼3 nm) and 11-MUA molecules in hydrophobic phospholipid membranes that self-assemble to form small unilamellar vesicles. A simple and homogeneous fluorescence assay for phospholipase C (PLC) was developed on the basis of the fluorescence quenching of 11-MUA-Au ND/Lip hybrids in aqueous solution. The fluorescence of the 11-MUA-Au ND/Lip hybrids is quenched by oxygen (O2) molecules in solution, and quenching is reduced in the presence of PLC. PLC catalyzes the hydrolysis of phosphatidylcholine units from Lip to yield diacylglycerol (DAG) and phosphocholine (PC) products, leading to the decomposition of Lip. The diacylglycerol further interacts with 11-MUA-Au NDs via hydrophobic interactions, leading to inhibition of O2 quenching. The 11-MUA-Au ND/Lip probe provides a limit of detection (at a signal-to-noise ratio of 3) of 0.21 nM for PLC, with high selectivity over other proteins, enzymes, and phospholipases. We have validated the practicality of using this probe for the determination of PLC concentrations in breast cancer cells (MCF-7 and MDA-MB-231 cell lines) and nontumor cells (MCF-10A cell line), revealing that the PLC activity in the first two is at least 1.5-fold higher than that in the third. An inhibitor assay using 11-MUA-Au ND/Lip hybrids demonstrated that tricyclodecan-9-yl potassium xanthate (D609) inhibits PLC (10 nM) with an IC50 value of 3.81 ± 0.22 μM. This simple, sensitive, and selective approach holds great potential for detection of PLC in cancer cells and for the screening of anti-PLC drugs.