The present studies were carried out to characterize the cAMP-phosphodiesterase enzyme (PDE) in luteal cells recovered from pseudopregnant rats with streptozotocin-induced diabetes. A significant increase in the specific activity of the enzyme was detected in luteal cells from diabetic rats (Group D) with respect to control rats (Group C). This increase could not be prevented by insulin therapy (Group I). Luteal cells from Groups C and D rats responded in vitro to insulin by increasing their PDE activity (% of stimulus of specific activity: C = 75%, D = 110%). However, in cells isolated from Group I, the hormone caused an inhibition of PDE activity (% of inhibition of specific activity: 48%). When cytosolic fractions from Groups C, D and I were submitted to ion exchange chromatography, two PDE activity peaks could be observed and the activity of the different fractions was increased in the presence of Ca2+ and calmodulin. Nevertheless, the Ca(2+)-calmodulin effect was much lower in the extracts from Groups D and I than for controls. Kinetic studies of luteal PDE showed nonlinear Lineweaver-Burk graphs with two apparent ATP hydrolysis sites. Similar K(m) values were found for PDE from groups C, D, and I, whereas the Vmax2 for the enzyme was higher in Groups D and I. The endogenous concentration of cAMP, measured by RIA, showed no significant differences among Groups C, D, and I. On the basis of these results, we conclude that the specific activity of PDE is significantly increased in luteal cells from streptozotocin-induced diabetic animals, which could explain the previously described reduction in LH-stimulated progesterone production by luteal cells in diabetic rats.