The adenylate cyclase activity from a rat liver plasma membrane preparation was inhibited by low concentrations (1-10 muM) of the mercurial diuretic mersalyl. Complete inhibition was obtained with 0.1 mM mersalyl. Similar effects were observed whether the adenylate cyclase preparation was assayed in the presence of 10 muM GTP, 0.1 muM glucagon, 10 mM NaF or without any addition. The effect of mersalyl was not due to inhibition of the regenerating system present in the incubation medium, since the effect of mersalyl was preserved and even enhanced in its absence. The inhibition brought about by mersalyl was due to both a decrease of the maximal velocity of the reaction and of the affinity of the enzyme for the substrate. It was immediate, and irreversible spontaneously, but it was reversed by the simultaneous additions of 2-mercaptoethanol, in a dose-dependent fashion. Other -SH reagents were found to have an effect equal to, or lower than, that of mersalyl. Mersalyl had no effect upon Mg2+-ATPase, although it inhibited the (Na+-K+) activated ATPase. Since mersalyl is known to be a 'non-penetrant' reagent, it is postulated that a catalytically important, mercurial-sensitive, part of adenylate cyclase is at the surface of the plasma membrane. This view is supported by the following facts: (a) mersalyl acted with a similar dose-response curve upon an intact as well as a detergent-dispersed cyclase preparation while no effect was observed upon a solubilized Mg2+-ATPase preparation; (b) a covalent p-chloromercuribenzoate-Sephadex preparation (but not its supernatant) inhibited the cyclase from intact membranes. It is proposed that mercurial derivatives, by their relative specificity of action (no effect on Mg2+-ATPase), can serve as useful probes in the elucidation of the multicomponent structure of the cyclase system.