The effect of bile acids on adenosine 3',5'-cyclic monophosphate (cAMP) synthesis was investigated in isolated hamster hepatocytes. Bile acids had no direct effect on cAMP production. However, ursodeoxycholic acid (UDCA) and tauroursodeoxycholic acid inhibited, by approximately 45%, cAMP formation induced by concentrations of glucagon greater than 1 nM, with a respective half-maximum inhibitory effect observed at 4 +/- 2 microM. Similar inhibition was observed with phorbol 12-myristate 13-acetate (PMA). Chenodeoxycholic, murocholic, and taurodeoxycholic acids were the next most potent bile acids. Taurolithocholic acid was 100-fold less potent than UDCA, whereas both ursocholic and taurocholic acids had no effect at concentrations up to 0.5 mM. Neither bile acids nor PMA affected either the binding of glucagon to its receptor, the cAMP-dependent phosphodiesterase, adenylate cyclase, or the inhibitory and stimulatory (Gs) GTP-binding proteins. The inhibitory effect of PMA and UDCA on glucagon-induced cAMP synthesis was abolished in the presence of the protein kinase C (PKC) inhibitor, staurosporine. Furthermore, UDCA induced PKC translocation from cytosol to membrane and stimulated phosphorylation of an 80-kDa protein substrate for PKC. In conclusion, mediated by PKC activation, bile acids inhibit glucagon-induced cAMP synthesis by uncoupling the glucagon receptor and Gs.