Intercellular communication between germ cells and neighboring somatic cells is essential for reproduction. Caenorhabditis elegans oocytes are surrounded by and coupled via gap junctions to smooth muscle-like myoepithelial sheath cells. Rhythmic sheath cell contraction drives ovulation and is triggered by a factor secreted from oocytes undergoing meiotic maturation. We demonstrate for the first time that signaling through the epidermal growth factor-like ligand LIN-3 and the LET-23 tyrosine kinase receptor induces ovulatory contractions of sheath cells. Reduction-of-function mutations in the inositol 1,4,5-trisphosphate (IP(3)) receptor gene itr-1 and knockdown of itr-1 expression by RNA interference inhibit sheath contractile activity. itr-1 gain-of-function mutations increase the rate and force of basal contractions and induce tonic sheath contraction during ovulation. Sheath contractile activity is disrupted by RNAi of plc-3, one of six phospholipase C-encoding genes in the C. elegans genome. PLC-3 is a PLC-gamma homolog and is expressed in contractile sheath cells of the proximal gonad. Maintenance of sheath contractile activity requires plasma membrane Ca(2+) entry. We conclude that IP(3) generated by LET-23 mediated activation of PLC-gamma induces repetitive intracellular Ca(2+) release that drives rhythmic sheath cell contraction. Calcium entry may function to trigger Ca(2+) release via IP(3) receptors and/or refill intracellular Ca(2+) stores.