The rate of appearance and extent of reconstituted adenylyl cyclase activity in the presence of guanyl-5'-yl imidodiphosphate (GMP-P(NH)P) upon mixing cholate extract of rat liver 10,000 X g particulate preparation and S49 cyc- cell membranes was dependent on Mg ion concentration. Increasing concentrations of Mg ion lead to progressively shorter lag times in the appearance of reconstituted activity. In contrast, at 20 mM MgCl2, the rate of appearance of reconstituted activity was insensitive to concentrations of GMP-P(NH)P, cyc- membrane protein, and untreated cholate extract protein, but became sensitive to cholate extract protein concentration after treatment with GMP-P(NH)P and Mg ion. Treatment of cholate extract with GMP-P(NH)P and Mg ion resulted in a faster appearance of reconstituted activity upon exposure to S49 cyc- membranes as compared to treatment in the presence of GMP-P(NH)P and EDTA. Activation of the regulatory component by GMP-P(NH)P occurred only in the presence of Mg ion. Mn2+, Ca2+, or Ba2+ did not appear to substitute for Mg. The effect of Mg ion allowing for the rapid appearance of reconstituted activity was reversible in the presence or absence of S49 cyc- membranes. However, while dilution of GMP-P(NH)P in the absence of S49 cyc- membranes resulted in relatively rapid reversal, treatment of cholate extract with 5 microM GMP-P(NH)P and 20 mM Mg ion followed by reconstitution at 5 or 0.1 microM GMP-P(NH)P showed similar reconstituted activities for up to 15 min. The rate of activation of the regulatory component was faster at 20 mM Mg ion as compared to that at 1 mM Mg ion. Similarly, the rate of activation of the regulatory component by NaF was also accelerated by increasing the concentration of Mg ion. These data indicate that the rate-limiting step in the activation of adenylyl cyclase is conversion of the regulatory component from its inactive to active form. In the presence of saturating concentration of guanine nucleotides and NaF, both the rate and extent of this activation is regulated by Mg ion.