The wall of the bovine carotid artery was divided into three layers, two consisting largely of smooth muscle and one containing mainly connective tissue. Cyclic AMP and ATP levels as well as the activities of adenylate cyclase and phosphodiesterase were higher in the layers containing smooth muscle than in the connective tissue layer. Incubation with labelled adenine yielded higher specific activity of cyclic AMP in smooth muscle layers than in the connective tissue layer. These results indicate that the cyclic AMP system is predominantly localized in those parts of the bovine carotid artery that contain smooth muscle cells.