DAG, or diacylglycerol, is a lipid molecule that plays a crucial role in cell signaling. It acts as a second messenger in various signaling pathways, particularly those initiated by the activation of G protein-coupled receptors. DAG is produced from phosphatidylinositol bisphosphate (PIP2) through the action of phospholipase C, and it works alongside another second messenger, inositol trisphosphate (IP3), to propagate cellular responses.