The activity of phospholipase D (PLD) is regulated by a variety of hormonal stimuli and provides a mechanistic pathway for response of cells to extracellular stimuli. The two identified mammalian PLD enzymes possess highly homologous C-termini which are required for catalytic activity. Mutational analysis of PLD1 and PLD2 reveals that modification of as little as the C-terminal threonine or the addition of a single alanine attenuates activity of the enzyme. Protein folding appears to be intact because mutant enzymes express to similar levels in Sf9 cells and addition of peptides representing the C-terminal amino acids, including the simple hexamer PMEVWT, restores partial activity to several of the mutants. Analysis of several mutants suggests a requirement for the hydrophobic reside at the -2 position but not an absolute requirement for the hydroxyl side chain of threonine at the C-terminus. The inability of peptides amidated at their C-termini to effect restoration of activity indicates the involvement of the C-terminal alpha carboxyl group in functional activity of these enzymes. The ability of peptides to restore activity to PLD enzymes mutated at the C-terminus suggests a flexible interaction of this portion of the molecule with a catalytic core constructed on conserved HKD motifs. Participation of these C-termini residues in either stabilization of the catalytic site or the enzymatic reaction itself remains to be determined. This requirement for the C-terminus provides an excellent potential site for interaction with regulatory proteins that may either enhance or down-regulate the activity of these enzymes in vitro.