Phospholipase C is an enzyme that plays a critical role in cell signaling by catalyzing the hydrolysis of phosphatidylinositol 4,5-bisphosphate (PIP2) in the cell membrane, producing inositol trisphosphate (IP3) and diacylglycerol (DAG). This enzymatic reaction is pivotal in various signal transduction pathways, triggering the release of calcium ions from the endoplasmic reticulum and activating protein kinase C, thus amplifying cellular responses to external stimuli.