Various methods reveal that cyclic AMP (cAMP) signalling in cells is compartmentalised. These methods use FRET probes based upon either protein kinase A (PKA) or EPAC, cAMP-gated ion channels, or the selective activation of AKAP-anchored PKA isoforms. The basis of compartmentalisation involves point sources of cAMP generation within sub-domains of the plasma membrane coupled to degradation by spatially segregated, anchored forms of cAMP phosphodiesterases. cAMP-specific phosphodiesterase-4 (PDE4) isoforms play a central role in determining compartmentalisation, as exemplified in cardiac myocytes and T cells. The PKA phosphorylation status of the beta2-adrenoreceptor, and hence its ability to switch its signalling from G(s) to G(i) and thus to activate ERK, is regulated dynamically by the agonist-stimulated recruitment of PDE4 to the receptor in complex with beta-arrestin. The co-receptor CD28 enhances signalling through the T-cell receptor by recruiting a PDE4/beta-arrestin complex, which then attenuates PKA phosphorylation of Csk.