1. As initially shown by Seamon and Daly, the diterpene forskolin directly activates adenylyl cyclase (AC) and raises cyclic AMP levels in a wide variety of cell types. In this review, we discuss several aspects of forskolin action that are often unappreciated. These include the utility of labeled forskolin as a means to quantitate the number of AC molecules; results of those types of studies, coupled with efforts to increase AC expression, document that such expression stoichiometrically limits cyclic AMP formation by hormones and neurotransmitters. 2. Response to forskolin is also strongly influenced by the activation of AC by the heterotrimeric G-protein, Gs. Gs-promoted enhancement of AC activity in response to forskolin occurs not only when cells are incubated with exogenously administered agonists that activate G-protein-coupled receptors but also by agonists that can be endogenously released by cells. 3. Such agonists, which include ATP and prostaglandins, serve as autocrine/paracrine regulators of cellular levels of cyclic AMP under "basal" conditions and also in response to forskolin and to agonists that promote release of such regulators. 4. The ability of forskolin to prominently activate cyclic AMP generation has proved valuable for understanding stoichiometry of the multiple components involved in "basal" cyclic AMP formation, in enzymologic studies of AC as well as in defining responses to cyclic AMP in cells within and outside the nervous system.