Lithium is a classical inhibitor of the phosphoinositide pathway and is teratogenic. We report the effects of lithium on the first cell cycles of sea urchin (Lytechinus pictus) embryos. Embryos cultured in 400 mM lithium chloride sea water showed marked delay to the cell cycle and a tendency to arrest prior to nuclear envelope breakdown, at metaphase and at cytokinesis. After removal of lithium, the block was reversed and embryos developed to form normal late blastulae. The lithium-induced block was also reversed by myo- but not epi-inositol, indicating that lithium was acting via the phosphoinositide pathway. Lithium microinjection before fertilization caused arrest prior to nuclear envelope breakdown at much lower concentrations (3-5 mM). Co-injection of myo-inositol prevented the block. Microinjection of 1–2 mM lithium led to block at the cleavage stage. This was also reversed by coinjection of myo-inositol. Embryos blocked by lithium microinjection proceeded rapidly into mitosis after photolysis of caged inositol 1,4,5-trisphosphate. These data demonstrate that a patent phosphoinositide signalling pathway is essential for the proper timing of cell cycle transitions and offer a possible explanation for lithium's teratogenic effects.