Early events in T-lymphocyte activation depend on the generation of internal diacylglycerol and the subsequent activation of protein kinase C (PKC). Membrane-permeant synthetic diacylglycerol analogues, such as 1,2-dioctanoyl-sn-glycerol (DiC8), are often used to activate PKC in intact cells; however, DiC8 is not a good activator of T cells. We have probed mechanisms that may explain this anomaly, using patch-clamp electrophysiology, Ca2+ spectrofiuorometry and proliferation assays. We find that micromolar concentrations of DiC8 inhibit a potassium channel (called Kv1 .3), consequently reducing the Ca2+ signalling and cell proliferation evoked by the mitogen, phytohemagglutinin. All these effects are significantly reduced by extracellular human serum albumin, added to compete with DiC8 binding to membrane proteins. Thus, direct K+-channel inhibition by diacylglycerol analogues may confound studies of the biological roles of these PKC-activating compounds.