An immobilized hepatocyte preparation was used to show that both vasopressin and glucagon could desensitize the ability of glucagon to increase intracellular cyclic AMP concentrations. This process was not dependent on any influx of extracellular Ca2+ and was not mediated by any rise in the intracellular level of Ca2+. The protein kinase C-selective inhibitors chelerythrine, staurosporine and calphostin C acted as potent inhibitors of the desensitization process but with various degrees of selectivity regarding their ability to inhibit the desensitizing actions of glucagon and vasopressin. The protein phosphatase inhibitor okadaic acid was just as potent as vasopressin and glucagon in causing desensitization. Treatment of hepatocyte membranes with alkaline phosphatase restored to near control levels the ability of glucagon to stimulate adenylate cyclase activity in membranes from both glucagon- and vasopressin-treated (desensitized) hepatocytes. It is suggested that the desensitization of glucagon-stimulated adenylate cyclase activity involves a reversible phosphorylation reaction with the likely target being the glucagon receptor itself.