Treatment of murine peritoneal macrophages with 100 nM prostaglandin E2 (PGE2) produced a rapid biphasic increase in intracellular cAMP that was maximal at 1 min and sustained through 20 min. Pretreatment of macrophages with 100 ng/ml of lipopolysaccharide (LPS) for 60 min prior to PGE2 decreased the magnitude of cAMP elevation by 50%, accelerated the decrease of cAMP to basal levels, and abolished the sustained phase of cAMP elevation. The effect of LPS was concentration-dependent, with maximal effect at 10 ng/ml in cells incubated in the presence of 5% fetal calf serum and at 1 microgram/ml in the absence of fetal calf serum. LPS also inhibited cAMP accumulation in cells treated with 100 microM forskolin, but the decrease was about half that seen in cells treated with PGE2. LPS concentrations that inhibited cAMP accumulation produced a 30% increase in soluble low Km cAMP phosphodiesterase activity while having no effect on particulate phosphodiesterase activity. The nonspecific phosphodiesterase inhibitor, 3-isobutyl-1-methylxanthine, as well as the more specific inhibitors rolipram and Ro-20-1724 were effective in inhibiting soluble phosphodiesterase activity in vitro, producing synergistic elevation of cAMP in PGE2-treated cells, and blocking the ability of LPS to inhibit accumulation of cAMP. Separation of the phosphodiesterase isoforms in the soluble fraction by DEAE chromatography indicated that LPS activated a low Km cAMP phosphodiesterase. The enzyme(s) present in this peak could be activated 6-fold by cGMP and were potently inhibited by low micromolar concentrations of Ro-20-1724 and rolipram. Using both membranes from LPS-treated cells and membranes incubated with LPS, no decrease in adenylylcyclase activity could be attributed to LPS. Although effects of LPS on the rate of synthesis of cAMP cannot be excluded, the present evidence is most consistent with a role for phosphodiesterase activation in the inhibitory effects of LPS on cAMP accumulation in murine peritoneal macrophages.