Multiple studies suggest that phospholipase C-gamma (PLC-gamma) contributes to regulation of sodium/hydrogen exchanger 3 (NHE3) in the small intestine, although the mechanism(s) for this regulation remain unknown. We demonstrate here that PLC-gamma binds directly to the C terminus of NHE3 and exists in similar sized multiprotein complexes as NHE3. This binding is dynamic and decreases with elevated [Ca(2+)](i). The PLC-gamma-binding site in NHE3 was identified (amino acids 586-605) and shown to be a critical regulatory domain for protein complex formation, because when it is mutated, NHE3 binding to PLC-gamma as well as NHERF2 is lost. An inhibitory peptide, which binds to the Src homology 2 domains contained in PLC-gamma without interrupting binding of PLC-gamma to NHE3, was used to probe a non-lipase-dependent role of PLC-gamma. In the presence of this peptide, carbachol-stimulated calcium inhibition of NHE3 was lost. These results mirror previous studies with the transient receptor potential channel and suggest that PLC-gamma may play a common role in regulating the cell-surface expression of ion transporters.