The hormone-stimulated 'dense-vesicle' cyclic AMP phosphodiesterase was solubilized as a proteolytically 'clipped' species, and purified to apparent homogeneity from rat liver with a 2000-3000-fold purification and a 13-18% yield. It appeared to be a dimer (Mr 112,000), of two Mr-57,000 subunits. Solubilization of either a liver or a hepatocyte membrane fraction, with sodium cholate in the presence of the protein inhibitor benzamidine, identified three protein bands which could be immunoprecipitated by a polyclonal antibody raised against the pure enzyme. The major band at Mr 62,000 is suggested to be the native 'dense-vesicle' enzyme, having a Mr-5000 extension which serves to anchor this enzyme to the membrane and which is cleaved off during proteolytic solubilization; the Mr-200,000 band is an aggregate of the Mr-62,000 species, and the Mr-63,000 species is possibly a precursor. The purified 'clipped' enzyme hydrolysed cyclic AMP with kinetics indicative of apparent negative co-operativity, with a Hill coefficient (h) of 0.43 and limiting kinetic constants of Km1 = 0.3 +/- 0.05 microM, Km2 = 29 +/- 6 microM, Vmax.1 = 0.114 +/- 0.015 unit/mg of protein and Vmax.2 = 0.633 +/- 0.054 unit/mg of protein. It hydrolysed cyclic GMP with Michaelis kinetics, Km = 10 +/- 1 microM and Vmax. = 4.1 +/- 0.2 units/mg of protein. Cyclic GMP was a potent inhibitor of cyclic AMP hydrolysis, with an IC50 (concn. giving 50% inhibition) of 0.20 +/- 0.01 microM-cyclic GMP when assayed at 0.1 microM-cyclic AMP. This enzyme was inhibited potently by several drugs known to exert positive inotropic effects on the heart, was extremely thermolabile, with a half-life of 4.5 +/- 0.5 min at 40 degrees C, and was shown to be distinct from the rat liver insulin-stimulated peripheral-plasma-membrane cyclic AMP phosphodiesterase [Marchmont, Ayad & Houslay (1981) Biochem. J. 195, 645-652].