Cyclic AMP is an important signalling molecule in prokaryotes and eukaryotes, but its significance in higher plants has been generally doubted because they have low adenylyl cyclase activity and barely detectable amounts of cAMP. Here we used activation T-DNA tagging to create tobacco cell lines that can proliferate in the absence of the phytohormone auxin in the culture media. The sequence tagged in one line, axi 141, was used to isolate a complementary DNA encoding adenylyl cyclase, the first from a higher plant. Sequence analysis reveals that the tobacco adenylyl cyclase is probably soluble, contains characteristic leucine-rich repeats, and bears similarity with adenylyl cyclase from the yeast Schizosaccharomyces pombe. Expression of the cDNA in Escherichia coli results in an increase in endogenous cAMP levels, and in yeast its expression functionally complements the cry1 mutation. Tobacco protoplasts treated with cAMP, or the adenylyl cyclase activator forskolin, no longer require auxin to divide. This finding, together with the observation that the adenylyl cyclase inhibitor dideoxyadenosine inhibits cell proliferation in the presence of auxin, suggests that cAMP is involved in auxin-triggered cell division in higher plants.