Cyclooxygenase (COX) has two isoforms, COX-1 and 2, which catalyze the key step in the conversion of cellular arachidonic acid (AA) into prostaglandins (PG). In recent years, interest in COX-2 has significantly increased since it has been a target for the development of specific non-steroidal anti-inflammatory drugs (NSAIDS). We report that COX-2 expression is upregulated in phorbol ester (PMA) differentiated human U937 macrophage-like cells stimulated with lipopolysaccharide (LPS), whereas COX-1 is not upregulated. We show that the LPS induced upregulation of COX-2 depends on the activity of the Mg⁺² dependent phosphatidic acid phosphohydrolase 1 (PAP-1). Inhibition of PAP-1 by bromoenol lactone (BEL), propranolol or ethanol resulted in a decrease in LPS induced COX-2 mRNA transcript production, COX-2 protein expression and PGE2 release from U937 macrophages. To ensure that these results did not arise because of PMA treatment of the U937 cells, similar experiments were conducted with the P388D1 cell line, which does not require PMA differentiation. LPS increased the levels of endogenous cellular DAG within two minutes of stimulation. This increase was observed to be sensitive to the PAP-1 inhibitors. Furthermore, PA phosphohydrolase activity assays showed that the BEL sensitive PAP-1 activity was translocated from the cytosolic fraction to the membrane fraction within two minutes of LPS exposure. Finally, DAG add-back experiements demonstrate that LPS induced COX-2 expression is enhanced by the addition of exogenous DAG.