The essential interactions between cAMP and the yeast low Km cAMP-phosphodiesterase have been analyzed using cAMP analogues and phosphodiesterase inhibitors. cAMP specificity is conferred by hydrogen bonding at the N-6 and N-7 positions. In contrast to the other yeast phosphodiesterase, (Rp)-adenosine 3',5'-monophosphorothioate is not hydrolyzed. Eleven standard phosphodiesterase inhibitors were not highly effective. In Chinese hamster ovary (CHO) cells that express the yeast cAMP-phosphodiesterase (PDE2) gene, cAMP levels cannot be raised by cholera toxin. cAMP analogues that are efficiently hydrolyzed by the yeast cAMP-phosphodiesterase had no effect on the growth of CHO cells that express the PDE2 gene, even though they block the growth and alter the morphology of control cells. cAMP analogues that are not hydrolyzed by the yeast enzyme inhibited the growth and changed the morphology of both control and PDE2 expressing CHO cells. We have developed a method for creating cell lines in which cAMP levels can be reduced by expression of an exogenous cAMP-phosphodiesterase gene. By employing cAMP analogues that are not hydrolyzed by this phosphodiesterase, the inhibitory effects of the enzyme can be bypassed.