Gq protein-coupled receptors (GqPCRs) of the plasma membrane activate the phospholipase C (PLC) signaling cascade. PLC cleaves the membrane lipid phosphatidylinositol 4,5-bisphosphate (PIP2) into the second messengers diacylgycerol (DAG) and inositol 1,4,5-trisphosphate (IP3), leading to calcium release, protein kinase C (PKC) activation, and in some cases, PIP2 depletion. We determine the kinetics of each of these downstream endpoints and also ask which is responsible for the inhibition of KCNQ2/3 (KV7.2/7.3) potassium channels in single living tsA-201 cells. We measure DAG production and PKC activity by Förster resonance energy transfer-based sensors, and PIP2 by KCNQ2/3 channels. Fully activating endogenous purinergic receptors by uridine 5'triphosphate (UTP) leads to calcium release, DAG production, and PKC activation, but no net PIP2 depletion. Fully activating high-density transfected muscarinic receptors (M1Rs) by oxotremorine-M (Oxo-M) leads to similar calcium, DAG, and PKC signals, but PIP2 is depleted. KCNQ2/3 channels are inhibited by the Oxo-M treatment (85%) and not by UTP (<1%), indicating that depletion of PIP2 is required to inhibit KCNQ2/3 in response to receptor activation. Overexpression of A kinase-anchoring protein (AKAP)79 or calmodulin (CaM) does not increase KCNQ2/3 inhibition by UTP. From these results and measurements of IP3 and calcium presented in our companion paper (Dickson et al. 2013. J. Gen. Physiol. http://dx.doi.org/10.1085/jgp.201210886), we extend our kinetic model for signaling from M1Rs to DAG/PKC and IP3/calcium signaling. We conclude that calcium/CaM and PKC-mediated phosphorylation do not underlie dynamic KCNQ2/3 channel inhibition during GqPCR activation in tsA-201 cells. Finally, our experimental data provide indirect evidence for cleavage of PI(4)P by PLC in living cells, and our modeling revisits/explains the concept of receptor reserve with measurements from all steps of GqPCR signaling.