Insulin and prostaglandin E1 (PGE1) can both inhibit lipolysis and can both decrease tissue cyclic adenosine 3′,5′-monophosphoric acid (cyclic AMP) levels. Insulin has been previously shown to stimulate a cyclic AMP phosphodiesterase in adipose tissue, and this work was undertaken to determine if PGE1 also had this action. Only insulin, and not PGE1, was able to inhibit lipolysis stimulated by exogenous cyclic AMP in isolated fat cells. Neither agent inhibited lipolysis stimulated by dibutyryl cyclic AMP. Under conditions when insulin stimulated a low Km cyclic nudeotide phosphodiesterase in adipose tissue, PGE1 did not affect the enzyme. These results suggest that insulin and PGE1 act at separate sites on the lipolytic process. In agreement with this it was found that a combination of maximally effective doses of insulin and PGE1 had a greater inhibitory effect on lipolysis than either agent alone. The effect of insulin on phosphodiesterase activity was not influenced by the presence of PGE1. It is concluded that the ability of insulin to decrease tissue cyclic AMP levels is due, at least in part, to its ability to stimulate cyclic AMP breakdown, and that PGEX acts at some other site to affect cyclic AMP levels, possibly at the level of adenyl cyclase. (Endocrinology93: 1315, 1973)