Phospholipase D (PLD) activation in stimulated neutrophils results in the conversion of membrane phosphatidylcholine (PC) to phosphatidic acid (PA). This change in membrane phospholipid composition has two potentially positive effects on degranulation. It 1) replaces a nonfusogenic phospholipid with a fusogenic one and 2) increases the potential for interactions between membranes and the annexins. Modeling neutrophil degranulation, we examined the effect of PLD (Streptomyces chromofuscus) hydrolysis on the aggregation and fusion of liposomes in the presence and absence of annexin I. We found that PLD-mediated conversion of PC to PA lowered the [Ca2+] required for fusion. Annexin I increased the rate of fusion in the presence of PA, although it did not lower threshold [Ca2+], which remained above the physiological range. However, after hydrolysis by PLD, annexin I lowered the [Ca2+] required for aggregation by almost three orders of magnitude, to near physiological concentrations. These studies indicate that the activation of PLD and the production of PA may play a role in annexin-mediated membrane-membrane apposition.