We have studied the localization, receptor occupancy and potency of the neuropeptide pituitary adenylate cyclase-activating polypeptide (PACAP) in insulin-producing tissues. Immunocytochemistry showed that PACAP-like immunoreactivity (PACAP-IR) was localized to pancreatic nerves with accumulation in intrapancreatic ganglia in both mouse and rat. In contrast, PACAP-IR could not be demonstrated in endocrine cells. Furthermore, in situ hybridization, using oligodeoxyribonucleotide probes recognizing mRNA for PACAP receptors, demonstrated that mouse and rat pancreas, and the insulinoma cell lines HIT-T15 and RINm5F, expressed both the PACAP type 1 and the VIP2/PACAP receptors. Moreover, both PACAP27 and PACAP38 dose-dependently (0.1 nM to 100 nM) and equipotently stimulated insulin secretion in isolated mouse and rat islets and in HIT-T15 and RINm5F cells. Furthermore, in mouse islets, vasoactive intestinal polypeptide (VIP) was of equal potency as PACAP at stimulating insulin secretion. In mouse, PACAP also stimulated insulin secretion in a subfraction of the isolated islets also at the low dose of 1 fM. Thus, (1) PACAP is exclusively a neuropeptide in the pancreas, (2) insulin-producing cells express PACAP type 1 and VIP2/PACAP receptors and (3) the two forms of PACAP equipotently stimulate insulin secretion. Based on these results, we suggest that PACAP is involved in the neural regulation of insulin secretion.