Bovine kidney phospholipase D (PLD) was assayed by measuring the formation of phosphatidylethanol from added radioactive phosphatidylcholine (PtdCho) in the presence of ethanol, guanosine 5'-[gamma-thio]triphosphate, ammonium sulfate, and cytosol factor that contained small GTP-binding regulatory proteins. The PLD enzyme associated with particulate fractions was solubilized by deoxycholate and partially purified by chromatography on a heparin-Sepharose column. This PLD preferentially used PtdCho as substrate. After purification, the enzyme per se showed little or practically no activity but required an additional factor for the enzymatic reaction. This factor was extracted with chloroform/methanol directly from particulate fractions of various tissues, including kidney, liver, and brain, and identified as phosphatidylethanolamine (PtdEtn), although this phospholipid did not serve as a good substrate. Plasmalogen-rich PtdEtn, dioleoyl-PtdEtn, and L-alpha-palmitoyl-beta-linoleoyl-PtdEtn were effective, but dipalmitoyl-PtdEtn was inert. Sphingomyelin was 30% as active as PtdEtn. The results suggest that mammalian PLD reacts nearly selectively with PtdCho in the form of mixed micelles or membranes with other phospholipids, especially PtdEtn.