The yeast genome contains two genes, designated as PLB2 and PLB3, that are 67% and 62% identical, respectively, to PLB1, which codes for a phospholipase B/lysophospholipase in yeast (Lee, S. K., Patton, J. L., Fido, M., Hines, L. K., Kohlwein, S. D., Paltauf, F., Henry, S. A., and Levin, D. E. (1994) J. Biol. Chem. 269, 19725-19730). Deletion and overexpression studies and in vivo and in vitro activity measurements suggest that both genes indeed code for phospholipases B/lysophospholipases. In cell free extracts of a plb1 plb2 plb3 triple mutant, no phospholipase B activity was detectable. Upon overexpression of PLB2 in a plb1 plb3 mutant background, phospholipase B activity was detectable in the plasma membrane, periplasmic space extracts and the culture supernatant. Similar to Plb1p, Plb2p appears to accept all major phospholipid classes, with a preference for acidic phospholipids including phosphatidylinositol 3',4'-bisphosphate and phosphatidic acid. Consistent with a function as an extracellular lysophospholipase, PLB2 overexpression conferred resistance to lyso-phosphatidylcholine. Deletion of Plb2p function had no effect on glycerophosphoinositol or glycerophosphocholine release in vivo, in contrast to a deletion of Plb3p function, which resulted in a 50% reduction of phosphatidylinositol breakdown and glycerophosphoinositol release from the cells. In vitro, Plb3p hydrolyzes only phosphatidylinositol and phosphatidylserine and, to a lesser extent, their lyso-analogs. Plb3p activity in a plb1 plb2 mutant background was observed in periplasmic space extracts. Both Plb3p and Plb2p display transacylase activity in vitro, in the presence or absence, respectively, of detergent.