We have used a luciferase reporter gene under the transcriptional control of a cAMP response element (CRE) to monitor the effects of G-protein alpha subunits on cAMP-regulated gene expression and to examine muscarinic acetylcholine receptor (mAChR) functional coupling to G-proteins. Expression in JEG-3 cells of a mutationally activated Gi alpha-2 in which glutamine 205 is replaced with leucine (Q205L) decreased forskolin-stimulated expression from the CRE-luciferase gene by up to 75%. Similarly, mutation of glycine 43 (corresponding to glycine 12 in p21ras) to valine decreased forskolin-stimulated expression from the CRE-luciferase gene by a maximum of 50%, indicating that this mutation activates the G-protein and is potentially oncogenic. Transfection of the activated Q205L G(o) alpha subunit decreased forskolin stimulation of CRE-luciferase expression. Transfected wild type G(o) alpha was also able to couple the m4 mAChR receptor to inhibition of AC. The amino-terminal myristoylation site was removed from wild type Gi alpha-2 and Q205L Gi alpha-2 by changing glycine 2 to alanine (G2A). Gi alpha-2 with the G2A and Q205L mutations was unable to decrease forskolin stimulation of CRE-mediated luciferase activity. Furthermore, G2A Gi alpha-2 was unable to couple the m4 mAChR to inhibition of AC. Thus, myristoylation is required both for the function of constitutively active Q205L Gi alpha-2 and for receptor-mediated activation of wild type Gi alpha-2.