cAMP plays an essential role during Dictyostelium development both outside and inside the cell. Membrane-bound receptors and adenylyl cyclase are responsible for sensing and producing extracellular cAMP, whereas a phosphodiesterase is responsible for maintaining a low basal level. The molecular events underlying this type of hormone like signalling, which are now beginning to be deciphered, will be presented, in the light of cAMP analogue studies. The importance of intracellular cAMP for cell differentiation has been demonstrated by the central role of the cAMP dependent protein kinase. Mutants as well as strains obtained by reverse genetics will be reviewed which lead to our current understanding of the role of intracelluar cAMP in the differentiation of both stalk and spore cells.