The effect of gonadotropins on phosphodiesterase activity of rat granulosa cells was studied in an in vitro model. Granulosa cells were prepared from hypophysectomized or intact, estrogen-primed immature female rats and treated with FSH, hCG, or (Bu)2cAMP in vitro. Phosphodiesterase activity was determined in cell homogenates. FSH treatment for 2 days produced a marked increase in phosphodiesterase activity, while hCG was ineffective. FSH stimulation was potentiated by the addition of 1-methyl-3-isobutylxanthine, while treatment with the cAMP analog, (Bu)2cAMP by itself also markedly stimulated enzyme activity. FSH stimulated cAMP, but not cGMP, hydrolysis, suggesting that a phosphodiesterase specific for cAMP was stimulated by the gonadotropin. Time-course studies showed that an increase in phosphodiesterase activity was apparent after 1 h of incubation and was maximal at 48 h. FSH stimulation of phosphodiesterase was dose-dependent, with an ED50 of 30 ng/ml FSH and a maximal increase at 100-300 ng/ml. Treatment with cycloheximide (1 or 10 micrograms/ml) completely blocked the gonadotropin stimulation, suggesting that on-going protein synthesis is required for the FSH action. DEAE-cellulose chromatography of soluble extracts of control and FSH-treated cells indicated that two forms of phosphodiesterase were present in unstimulated granulosa cells. The first form, eluting at 0.17 M Na-acetate, hydrolyzed both cAMP and cGMP and was stimulated by Ca++ and calmodulin; the second form, eluting at 0.48 M Na-acetate, was insensitive to Ca++ or calmodulin and hydrolyzed mainly cAMP. FSH treatment markedly stimulated cAMP hydrolysis by the calmodulin-dependent first form as well as that by the second form. Double reciprocal analysis indicated that the FSH-stimulated enzymes are of high affinity for cAMP. In agreement with the data on total homogenate, the cGMP hydrolysis was not affected by the hormone treatment. These data demonstrate that FSH stimulates cAMP, but not cGMP, phosphodiesterase activity in rat granulosa cells in vitro. This stimulation might represent a mechanism for termination of the FSH primary stimulus and regulation of granulosa cell responsiveness to the gonadotropin.