1. Kinetics of membrane-bound cyclic AMP phosphodiesterase of the cellular slime mold, Dictyostelium discoideum, were studied under two conditions: in the 27 000 times g sediment of cell homogenates (particle-bound phosphodiesterase) and in cell suspensions using external cyclic AMP as a substrate (cell-bound phosphodiesterase). Both methods revealed non-Michaelian kinetics with interaction coefficients less than 1. 2. The membrane-bound phosphodiesterase has a specificity different from that of the cyclic AMP receptor, also present at the cell surface. 3. The membrane-bound enzyme was solubilized by lithium 3, 5-diiodosalicylate and partially purified. In this state the non-linear kinetics were still retained; however, the enzyme was not inhibited by the D. discoideum inhibitor, unlike the cell-bound phosphodiesterase in vivo. This indicates that both enzymes share an inhibitor binding site and that this site is cryptic in the cell-bound state. 4. Production of periodic cyclic AMP pulses by centers, and their relay by other cells, is believed to occur during aggregation. It is suggested that the cell-bound enzyme determines a "time window" significantly smaller than the period of pulsing, and optimizes stimulation of the cyclic AMP receptors in chemotaxis and signal relaying.