In response to environmental stimuli, leukocyte membrane remodelling generates biologically active lipids that can serve as both intra-and extracellular mediators(1). There are several classes of lipids that can mediate inflammatory reactions.(1) We report here on a new intracellular lipid signal that regulates oxygen-radical formation in neutrophils, a key response in microbial killing, inflammation and tissue injury. Screening of neutrophil-derived extracts rich in phosphorylated, non-saponifiable lipids revealed a potent inhibitor of superoxide anion (O-2(-)) production. Structural analysis of biologically active fractions gave four major phosphorylated lipids : most abundant was presqualene diphosphate (PSDP). Upon activation of neutrophil receptors, PSDP and its monophosphate form, presqualene monophosphate (PSMP), undergo rapid remodelling. At submicromolar concentrations, PSDP but not PSMP inhibit O-2(-) production by human neutrophil cell-free oxidase preparations. We prepared PSDP and PSMP by total organic synthesis and matched both the physical properties and biological activity of the neutrophil-derived compounds. Our results indicate that PSDP, a recognized intermediate of cholesterol biosynthesis(2), is present in immune effector cells and is a potent regulator of the cellular response in host defence.