Islet activating protein (IAP), a toxin isolated from Bordetella pertussis, blocks the ability of inhibitory hormones to attenuate adenylate cyclase activity and enhances the ability of stimulatory hormones to activate the enzyme. The toxin appears to act by catalyzing the transfer of ADP ribose from NAD to a 41,000-dalton protein in target cell membranes. A protein purified from rabbit liver membranes, apparently composed of 41,000- and 35,000-dalton subunits, is shown to be a specific substrate for IAP. Cholera toxin does not ADP-ribosylate this protein. In contrast, the purified guanine nucleotide-binding regulatory component of adenylate cyclase (G/F), which is ADP-ribosylated by cholera toxin, is not covalently modified by IAP. Equilibrium binding studies and photoaffinity labeling experiments demonstrate that the 41,000-dalton subunit of the IAP substrate has a specific binding site for guanine nucleotides.