N-Ethylmaleimide treatment of rat liver plasma membranes results in an adenylyl cyclase (EC 188.8.131.52) system that shows no measurable cyclizing activity but retains both an active glucagon receptor and a receptor-sensitive regulatory component N as assessed by reconstitution into cyclase-negative (cyc-) membranes from S49 murine lymphoma. Treatment of such N-ethylmaleimide-treated membranes, termed C- liver membranes, with guanosine 5'-[gamma-thio]triphosphate (GTP[gamma S] ) and Mg2+, followed by the removal of GTP[gamma S] by washing, yields an activated N which upon mixing with cyc- S49 membranes reconstitutes the cyc- S49 membrane adenylyl cyclase in the absence of added GTP[gamma S]. It was found that GTP[gamma S] activation of the N at saturating concentrations of GTP[gamma S] is slow at low Mg2+ concentration and accelerated by increasing Mg2+ concentrations. Addition of glucagon during the activation results in a lowering of the Mg2+ requirement for full activation from 25 mM to around 10 muM and in concomitant increases in both the rate and the extent of N activation. In contrast to its dramatic effect on Mg2+ requirement, glucagon has little (less than 2-fold) effect on the GTP[gamma S] requirement of N activation. These experiments indicate that the glucagon receptor facilitates activation of N by: (i) decreasing the apparent Km of N for Mg2+, and (ii) increasing the extent of activation that can be elicited by saturating concentrations of guanine nucleotide. It is postulated that the mechanism by which Mg2+ and receptors facilitate N activation involves dissociation of n alpha activated ADP-ribosylatable subunits (with guanine nucleotide bound to them) from n beta non-ADP-ribosylatable subunits (with receptor and Mg2+ bound to them).