Treatment of cells with platelet-derived growth factor (PDGF) was previously shown to increase the release of unesterified fatty acids from phospholipids. In view of these observations we examined the effect of various fatty acids on PDGF receptor activity. Unsaturated (oleic, linoleic, linolenic, and arachidonic) but not saturated (stearic and arachidic) fatty acids significantly inhibited the tyrosine kinase activity of the PDGF receptor in intact cells and membrane preparations. Half-maximal inhibition (IC50) was observed between 60 and 100 microM and maximal inhibition between 170 and 200 microM. Lysophospholipids and phospholipids had no effect on receptor activity. Activation of endogenous phospholipase A2 by mellitin in vivo or hydrolysis of phosphatidylcholine by purified phospholipase A2 in vitro inhibited PDGF receptor autophosphorylation similar to that of purified fatty acids. Dimerization of PDGF receptors in vivo was significantly reduced by concentrations of arachidonic acid inhibitory for receptor kinase activity while the binding of PDGF was only marginally affected. These data suggest a possible feedback mechanism resulting in the reduction of PDGF receptor activity by unsaturated fatty acids generated downstream within the PDGF-dependent signal transduction pathway and this effect may be as a direct result of decreased receptor dimerization and/or kinase activity.