The effects of forskolin on rat liver plasma membrane adenylyl cyclase were studied. The diterpene stimulated the Vmax of the enzyme system with apparent Km values of 3-5 microM. Stimulations were marked both in the absence (20-fold over control) as well as in the presence of various stimulators such as GTP, GuoPP[NH]P, NaF alone or in combination with glucagon. Except with GTP, where stimulations of activities by forskolin and the nucleotide were synergistic (more than additive), stimulations of combinations of GuoPP[NH]P, NaF or glucagon with forskolin were additive. Forskolin did not alter significantly the apparent Km values of the enzyme for MgATP or MnATP or the apparent Ka values (concentrations giving stimulations that are 50% of maximum) for Mg or Mn ions, GTP, GuoPP[NH]P or NaF. Forskolin caused a decrease in the concentration of glucagon required for half-maximal stimulation from 5 microM to 1.5 microM. Except for this effect on the Ka for the glucagon, the only kinetic parameter altered was the Vmax under all conditions tested. Although proteolysis stimulated liver membrane adenylyl cyclase under control conditions, it did not enhance forskolin-stimulated activities. More extensive proteolysis, which resulted in decreased activities in the absence of forskolin, also resulted in reduced forskolin-stimulated activities. 'Uncoupling' of the guanine-nucleotide-binding regulatory component, that mediates guanine nucleotide stimulation by addition of 30 mM MnCl2, did not result in 'uncoupling' of forskolin stimulation. The data indicate that the diterpene forskolin stimulates adenylyl cyclase activity by a novel mechanism that differs from that by which NaF or guanylyl nucleotides affect this membrane-bound system and that the diterpene should be a useful tool with which to explore as yet unrecognized modes of regulation of cyclic AMP production.