Mechanisms by which G-protein-coupled odorant receptors transduce information in insects still need elucidation. We show that mutations in the Drosophila gene for G(q)alpha (dgq) significantly reduce both the amplitude of the field potentials recorded from the whole antenna in responses to odorants as well as the frequency of evoked responses of individual sensory neurons. This requirement for G(q)alpha is for adult function and not during antennal development. Conversely, brief expression of a dominant-active form of G(q)alpha in adults leads to enhanced odor responses. To understand signaling downstream of G(q)alpha in olfactory sensory neurons, genetic interactions of dgq were tested with mutants in genes known to affect phospholipid signaling. dgq mutant phenotypes were further enhanced by mutants in a PLCbeta (phospholipase Cbeta) gene, plc21C. Interestingly although, the olfactory phenotype of mutant alleles of diacylglycerol kinase (rdgA) was rescued by dgq mutant alleles. Our results suggest that G(q)alpha-mediated olfactory transduction in Drosophila requires a phospholipid second messenger the levels of which are regulated by a cycle of phosphatidylinositol 1,4-bisphosphate breakdown and regeneration.