The effect of somatostatin on glucose-induced insulin secretion and cyclic AMP accumulation in isolated islets from obese, hyperglycemic ob/ob mice was studied in a microperifusion system. The normal biphasic pattern of insulin release as well as the inhibitory pattern of insulin release produced by somatostatin (0.5--1 microgram/ml) was matched by similar changes in the intracellular concentration of cyclic AMP. When islets were stimulated by glucose (3 mg/ml) plus 3-isobutyl-1-methylxanthine (0.1 mM), somatostatin (0.5 microgram/ml) failed to inhibit insulin secretion or cyclic AMP formation in the second phase whereas in the first phase both parameters were significantly reduced by somatostatin (0.5 microgram/ml). In batch-type incubations it was shown that addition of excess calcium (to 6 mM) reversed this inhibition. In the second phase calcium potentiated the (glucose + 3-isobutyl-1-methylxanthine)-stimulated insulin secretion without affecting the cyclic AMP production. This potentiation was inhibited by somatostatin (0.1 microgram/ml). Somatostatin (1 microgram/ml) inhibited adenylate cyclase activity in islet homogenates. No effect of somatostatin on islet glucose utilization could be demonstrated. The results indicate a dual action of somatostatin in the inhibition of insulin release, one involving the islet adenylate cyclase and one affecting the islet uptake of calcium.