We have found that Torpedo electric organ readily synthesizes prostaglandin E2 from both exogenous and endogenous arachidonate and that activation of the presynaptic muscarinic acetylcholine receptor increases the rate of prostaglandin E2 synthesis by inducing the release of tissue arachidonate from its phospholipid pools. The incorporation of radiolabeled arachidonate into tissue phospholipids is slow and Ca2+ independent. However, the electric organ slices readily oxidize the externally added, radiolabeled arachidonate via the cyclo-oxygenase pathway, with prostaglandin E2 being the major product (22 ± 4% of the initial radioactivity). This process is not affected by either Ca2+ or mepacrine. Torpedo electric organ slices also synthesize prostaglandin E2 from endogenous substrates, and release it into the medium. This process, however, is enhanced by Ca2+ and inhibited by mepacrine. Activation of the Torpedo muscarinic acetylcholine receptor by the agonist oxotremorine results in a dose-dependent atropine-sensitive increase in the synthesis of prostaglandin E2 from endogenous tissue substrates and in the concomitant release of arachidonate into the medium. By contrast, oxotremorine has no effect on either the formation of [14C]prostaglandin E2 from exogenous arachidonate, the incorporation of radiolabeled arachidonate into tissue phospholipids or its liberation from prelabeled slices. These results suggest that activation of the muscarinic acetylcholine receptor induces lipolysis which results in the liberation of endogenous arachidonate and its subsequent conversion to prostaglandin E2.