Cells carefully regulate the generation and destruction of cAMP using diverse families of adenylate cyclases and phosphodiesterases. Genes for several cyclases have now been cloned, giving structural information about the enzymes and providing access to the remaining members of this family. A much larger family of phosphodiesterases has been uncovered and the regulatory properties of both the cyclases and phosphodiesterases provide diverse mechanisms to modulate intracellular cAMP. Most of the actions of cAMP are mediated through phosphorylation of substrates of the cAMP-dependent protein kinases. Recent progress has helped define the pathway between cAMP and the activation of gene transcription.