At low concentrations the local anesthetic dibucaine stimulates hydrolysis by pancreatic phospholipase A2 of phospholipids extracted from rat liver mitochondria or microsomes, whereas at higher concentrations it inhibits. The action of this enzyme towards membrane-bound substrates is barely influenced by low, but inhibited by high concentrations of dibucaine. 2. Butacaine, which is a weaker anesthetic, stimulates hydrolysis of extracted phospholipids and inhibits that of membrane-bound substrates, both actions being concentration dependent. 3. The inhibitory potency of dibucaine is several times higher in NaCl than in sucrose solutions and strongly increases with decreasing pH. Neither one of these two effects is the result of a change in binding efficiency of the anesthetic to the substrates. 4. Extracted total membrane lipids bind considerably less anesthetic than an equivalent amount of native membrane. Liver phosphatidylethanolamine is more effective in binding of dibucaine than liver phosphatidylcholine. 5. Binding of dibucaine to the phospholipase, as studied by equilibrium dialysis is at the lower level of detectability. According to the same method dibucaine is unable to displace 45Ca2+ bound to the enzyme. 6. These results are interpreted as to support the view that local anesthetics interfere with pancreatic phospholipase activity by means of interaction with the substrate rather than with the enzyme.