Adenylate cyclase activity measured in membranes of cultured normal rat kidney (NRK) fibroblasts was markedly increased by prior treatment of the intact cells with trypsin. Cell population density influenced the extent of activation observed. Trypsin treatment of sparse cells significantly enhanced adenylate cyclase activity, whereas similar treatment of confluent cells caused only a slight increase in adenylate cyclase activity. The degree of activation noted after trypsin treatment also varied depending on the adenylate cyclase function measured. Activity determined in the presence of GTP alone showed the greatest increase after trypsin treatment. Similar enhancement of adenylate cyclase activity of a washed cell membrane preparation was achieved by the addition of low concentrations of trypsin directly to the adenylate cyclase reaction mixture. The membranes of confluent NRK fibroblasts initially exhibited higher adenylate cyclase activity than did membranes of sparse cells. The present results suggest that this change in adenylate cyclase activity at cell confluence is not due to an increase in the amount of adenylate cyclase in the cell membrane but rather to a change in membrane components that regulate its activity. Proteolytic activation of adenylate cyclase appears to result from degradation of cell membrane proteins that modulate the activity of this enzyme.