A membranous fraction from calf brain, sedimenting at 10,000g, catalyzes the decarboxylation of exogenous phosphatidyl[14C]serine presented in an aqueous dispersion in detergent. The product formed by the enzymatic decarboxylation reaction is chemically and chromatographically identical to phosphatidyl[14C]ethanolamine. The calf brain decarboxylase activity: (1) did not require divalent cations; (2) was optimally active at neutral pH; (3) exhibited maximal activity in the presence of 0.1% Cutscum or sodium taurocholate; (4) was inhibited by hydroxylamine or p-hydroxymercuribenzoate; and (5) has an apparent Km = 2.4 mm for the phospholipid substrate. Initial subcellular fractionation studies with rat brain showed that the highest level of decarboxylase activity was present in the mitochondrial-lysosomal fraction. When this fraction was further separated by metrizamide density centrifugation, 90% of the phosphatidylserine decarboxylase activity was associated with the mitochondria. Resolution of the inner and outer membranes of the mitochondria revealed that greater than 99% of the decarboxylase activity was bound to the inner membrane. In contrast to this result, diacylglycerol ethanolaminephosphotransferase, another enzyme responsible for phosphatidylethanolamine biosynthesis in brain, was greatly enriched in the microsomal fraction. The highest level of phospholipid N-methyltransferase activity was also localized in the microsomal fraction. Thus, phosphatidylethanolamine formation via cytidine diphosphate ethanolamine in brain occurs at a membrane site where it should be available for the biosynthesis of phosphatidylcholine by stepwise methylation. In order for phosphatidylethanolamine formed by the decarboxylation reaction to be available for N-methylation, translocation from mitochondria to the microsomal site would be required. © 1983.