Chlordiazepoxide (CDE) has been shown to antagonize the effects of TRH to stimulate the hydrolysis of phosphoinositides and elevate cytoplasmic free calcium in rat pituitary tumor (GH3) cells. Herein, we show that CDE inhibits TRH stimulation of PRL secretion and that the effect of CDE to antagonize TRH action is caused by its ability to compete with TRH for binding to receptors on GH3 cells. We also use CDE to explore whether continued receptor occupancy is required for prolonged stimulation of cellular responses. CDE had no effect on basal PRL secretion, but caused a dose-dependent inhibition of TRH-induced PRL secretion. CDE decreased the affinity of TRH binding to intact GH3 cells without affecting the maximum binding capacity. As shown previously, CDE had no effect on phosphoinositide metabolism, which was monitored because it appears to be a mechanism for signal transduction by TRH, and when added simultaneously with TRH, caused a dose-dependent inhibition of TRH-induced phosphoinositide metabolism. When CDE was added to cells 2.5 or 5 min after TRH, CDE rapidly terminated the stimulation by TRH of phosphoinositide hydrolysis, shown as inhibition of the continued formation of inositol phosphates and inositol, and of the decrease in phosphoinositides. Lastly, when cells were stimulated with 50 nM TRH, then exposed to 100 microM CDE, and finally to 1000 nM TRH, inositol phosphate formation was stimulated, then inhibited, and then restimulated. These data demonstrate that CDE acts as a competitive antagonist of TRH action on GH3 cells by competing with TRH for binding to its receptor and that continued stimulation by TRH of phospholipase C-mediated hydrolysis of phosphoinositides is tightly coupled to receptor occupancy.