Freshly isolated rat hepatocytes maintained as monolayers in a serum-free medium synthesize sulphated glycosaminoglycans, most of which behave as heparan sulphate and are mainly distributed into intracellular compartments. Cyclic AMP, dibutyryl cyclic AMP, glucagon, noradrenaline, prostaglandin E(1), and theophylline, all drugs and hormones known to increase intracellular cyclic AMP concentrations, decreased the incorporation of (35)SO(4) (2-) into heparan sulphate of intra-, extra- and peri-cellular pools. The inhibition mediated by dibutyryl cyclic AMP was dose-dependent and observed as early as 2h after exposure to the drug. In the presence of 1mm-dibutyryl cyclic AMP, incorporation of (35)SO(4) (2-) or [(14)C]glucosamine into heparan sulphate was decreased to 40-50%, suggesting that dibutyryl cyclic AMP interfered with the synthesis of heparan sulphate. This was further supported by pulse-chase experiments, where dibutyryl cyclic AMP had no effect on the degradation of sulphated glycosaminoglycans. Heparan sulphates synthesized and secreted into the extracellular pool in the presence of dibutyryl cyclic AMP were smaller in size, whereas the degree of sulphation and molecular size of the heparan sulphate chains released by beta-elimination from these proteoglycans were not different from control values. In the presence of 1mm-cycloheximide, (35)SO(4) (2-) incorporation was decreased to 5%. Addition of p-nitrophenyl beta-d-xyloside, an artificial acceptor of glycosaminoglycan chain synthesis, enhanced this incorporation to 18%. Dibutyryl cyclic AMP did not have any inhibitory effect on the synthesis of chains initiated on p-nitrophenyl beta-d-xylosides. Incorporation of [(3)H]serine into heparan sulphate was not affected by dibutyryl cyclic AMP, whereas the degree of substitution of serine residues with heparan sulphate chains was less in heparan sulphate synthesized in the presence of dibutyryl cyclic AMP, suggesting that cyclic AMP exerts its effect on the metabolism of sulphated glycosaminoglycans by affecting the transfer of xylose on to the protein core.