Pituitary adenylate cyclase-activating peptide (PACAP) is present in nerves in the vicinity of bronchial and vascular smooth muscle in the airways. At least one endogenous form of PACAP, PACAP 1-27, has high affinity binding sites in the lung, probably including cholinergic nerve terminals, bronchial smooth muscle, epithelial and mononuclear inflammatory cells. The mechanism of action for PACAP 1-27 and 1-38 in vivo involves endogenous catecholamines, peptidases and nitric oxide, depending on tissue type. Intracellularly, cyclic adenosine monophosphate (cAMP) as well as calcium and sodium mobilization is probably involved. PACAP 1-27 and 1-38 inhibit airway smooth muscle tone in vitro and in vivo. The inhibitory effect of PACAP 1-38 is more sustained than that of PACAP 1-27, in vitro as well as in vivo. PACAP 1-38 also causes more sustained inhibition of bronchoconstriction after inhalation in vivo, than does vasoactive intestinal peptide (VIP). PACAP 1-27 given intravenously virtually abolishes allergen-induced bronchoconstriction in vivo. Novel synthetic analogues of PACAP 1-27 cause more sustained inhibition of airway smooth muscle tone in vitro and in vivo than do PACAP 1-27 or 1-38. Both PACAP 1-27 and 1-38 inhibit arterial smooth muscle tone but, administration of PACAP 1-27, 1-38 or a structural analogue of PACAP 1-27 in the airways, induces no cardiovascular side effects at doses inhibiting bronchoconstriction. PACAP 1-38 enhances phagocytosis in macrophages and inhibits the release of the pro-inflammatory cytokine interleukin-2 in lymphocytes, suggesting antiinflammatory effects. It is concluded that pituitary adenylate cyclase-activating peptide 1-27 and 1-38, or structurally related molecules, may be useful as bronchodilators but their effect on human bronchial smooth muscle and on human inflammatory cells is in need of evaluation.