During the aggregation of Dictyostelium discoideum extracellular cAMP is known to act as a chemotractant and as an inducer of cellular differentiation. However, its intracellular role as a second messenger remains obscure. We have constructed a fusion gene consisting of the cDNA encoding the regulatory subunit (R) of the cAMP-dependent protein kinase fused to the promoter and N-terminal-proximal sequences of a Dictyostelium actin gene. Stable transformants, containing multiple copies of this gene, overproduce the R subunit which accumulates prematurely relative to the endogenous protein. These transformants fail to aggregate. Detailed analysis has shown that they are blocked at interphase, the period prior to aggregation, and that they are severely defective in most responses to cAMP including the induction of gene expression. Our observations suggest that intracellular cAMP acts, presumably by activation of the catalytic subunit of the cAMP-dependent protein kinase, to facilitate early development.