A CDP-diglyceride hydrolase activity, measured by the release of [3H]CMP from labeled CDP-diglyceride, has been identified in pig liver mitochondria. A modified preparatory method for the synthesis of [3H]CDP-diglyceride of high specific activity and purity is also reported. Activity of the hydrolase is enriched 2.5-fold in mitochondrial membranes (over whole mitochondria) and can be solubilized by nonionic detergents such as Triton X-100 with further enrichment of activity (i.e., 7.9-fold). The CDP-diglyceride hydrolase has a Km of 12.8 μM for CDP-diglyceride and a broad pH range with optimum activity at approximately pH 6.2. Of the CDP-diglycerides tested, the hydrolytic rate is highest for dioleoyl CDP-diglyceride. Activity is inhibited by all divalent cations in whole mitochondria, except in the presence of phosphatidylglycerol in which CMP release is stimulated by Co2+ and Mn2+. The increase in CMP release in the presence of Co2+ or Mn2+ can be accounted for entirely by diphosphatidylglycerol synthase activity which requires either cation. This effect is not seen in Triton X-100 solubilized mitochondrial membranes which contain no diphosphatidylglycerol synthase. All preparations are inhibited by mixed phospholipids (Asolectin) and by Trixon X-100 which abolishes activity completely at concentrations greater than 0.5% (w/v). CDP-diglyceride hydrolase is also inhibited by AMP (46%) and by cytidine nucleotides (CTP > CDP > cytidine) except CMP. A role for this activity in the regulation of biosynthesis of mitochondrial polyglycerophosphatides is proposed.