Conjugated bile acids such as taurocholic acid (TChA) are potent olfactory stimuli for Atlantic salmon (Salmo solar). A plasma membrane rich fraction was derived from salmon olfactory rosettes and used to investigate TChA signal transduction and receptor binding. In the presence of GTPγS, TChA caused dose-dependent stimulation of phospbatidylinositol 4,5-bisphosphate (PIP2) breakdown, half maximal at less than 10-7 M TChA. Stimulation of PIP2 breakdown by TChA required GTPΓS, was blocked by GDPβS, and was mimicked by AlF4-, consistent with a G protein requirement. AlF4-- and Ca2+ stimulated breakdown of PIP2, but not phosphatidylcboline, arguing against a non-specific lipase activation. Stimulation of PIP2 breakdown by TChA was maximal at low Ct2+ concentration, ≤ 10 nM. Conventional binding analysis with 3H-TChA was inconclusive due to a high degree of non-specific binding and to lack of tissue specificity expected for an olfactory receptor. Analysis of odorant amino acid binding indicated possible interaction of TChA with a putative acidic amino acid receptor but no interaction of TChA with a putative neutral amino acid receptor. We conclude that olfactory discrimination between amino acids and bile acids occurs in part at the receptor level while both classes of odors appear to use the same signal transduction mechanism, G protein mediated activation of phosphoinositide specific phospholipase C (PLC). © 1994 Oxford University Press.