The frog erythrocyte adenylate cyclase system was inhibited by addition of acidic phospholipids. The ratio of activity produced by isoproterenol to that produced by norepinephrine was not significantly changed by addition of various phospholipids and lipid extracts. Addition of isoproterenol plus Gpp(NH)p to the frog erythrocyte membranes produced an adenylate cyclase activity much higher than the sum of activities produced by these reagents when tested separately. The same high rate was still obtained after preincubation of the enzyme with isoproterenol plus Gpp(NH)p followed by exhaustive washing of the preparation. ATP and Mg++ were not required for the preincubation. When isoproterenol alone was preincubated with the enzyme, a persistent active state was not produced; dilution or washing readily reduced the activity to the low basal level. Formation of the persistent active state by preincubation with Gpp(NH)p plus isoproterenol was prevented by the beta-receptor blocking agent propranolol which reduced the activity to that obtained by Gpp(NH)p alone. However, propranolol completely failed to inhibit the activity if added after the enzyme had been preincubated with the catecholamine plus the nucleotide. Propranolol readily blocked the activity when added to enzyme which had been preincubated with isoproterenol alone. The findings lead to the tentative conclusion that the hormone acts by facilitating the action of Gpp(NH)p and that, having done so, the hormone perhaps plays no further role. It is further suggested that in the case of the natural nucleotide GTP, the hormone is required continuously for activation in order to maintain GTP at a regulatory site.