Forskolin, a diterpene of the labdane family, activates adenylate cyclase in broken cell preparations as well as in intact tissues. This activation does not require the guanine nucleotide regulatory subunit of the enzyme and probably occurs via an interaction with the catalytic subunit of adenylate cyclase. Activation of adenylate cyclase by forskolin results in marked increases in levels of intracellular cyclic AMP in a variety of eukaryotic cells. Low concentrations of forskolin which alone elicit small increases in intracellular cyclic AMP greatly potentiate hormonal activation of adenylate cyclase in a number of intact cells. Forskolin elicits cellular responses which have been proposed to be dependent o cyclic AMP as a second messenger. Forskolin, thus provides an invaluable tool for the investigation of the role of cyclic AMP in physiological responses to hormones, both through it direct activation of adenylate cyclase and through its ability to potentiate hormonal activation of adenylate cyclase.