Regulation of blood glucose levels by the liver is primarily achieved by the action of two peptide hormones, insulin and glucagon, which bind to specific receptors associated with the hepatocyte plasma membrane. Whilst the molecular action of glucagon at the level of the cell plasma membrane in activating adenylate cyclase is relatively well understood, we know little, if anything, of the molecular consequences of insulin occupying its receptor. We demonstrate here that insulin, at physiologically relevant concentrations, can trigger the cyclic AMP-dependent activation and phosphorylation of a low Km cyclic AMP phosphodiesterase attached to the liver plasma membrane. Such an effect may in part explain the ability of insulin to inhibit the increase in cellular cyclic AMP content that glucagon alone produces by activation of adenylate cyclase. Our observation that basal, intracellular cyclic AMP levels are insufficient to allow insulin to activate the cyclic AMP phosphodiesterase, yet those cyclic AMP levels achieved after exposure of the cells to glucagon are sufficient, gives a molecular rationale to Butcher and Sutherland's proposal that it is necessary to first elevate cellular cyclic AMP levels before they can be depressed by insulin.