Smooth muscle of the gut undergoes rhythmic cycles of contraction and relaxation. Various constituents in the pathways that mediate muscle contraction could act to cross-regulate cAMP or cGMP levels and terminate subsequent relaxation. We have previously shown that cAMP levels are regulated by PKA-mediated phosphorylation of cAMP-specific phosphodiesterase 3A (PDE3A) and PDE4D5; the latter is the only PDE4D isoform expressed in smooth muscle. In the present study we have elucidated a mechanism whereby cholecystokinin (CCK) and, presumably, other contractile agonists capable of activating protein kinase C (PKC) can cross-regulate cAMP levels. Forskolin stimulated PDE4D5 phosphorylation and PDE4D5 activity. CCK significantly increased forskolin-stimulated PDE4D5 phosphorylation and activity and attenuated forskolin-stimulated cAMP levels. The effect of CCK on forskolin-induced PDE4D5 phosphorylation and activity, and on cAMP levels was blocked by the inhibitors of phospholipase C (PLC) or PKC, and in cultured muscle cells by the expression Gaq minigene. The effects of CCK on PDE4D5 phosphorylation, PDE4D5 activity, and cAMP levels were mimicked by low (1 nM) concentrations of okadaic acid, but not by a low (1 nM) concentration of tautomycin, suggesting involvement of PP2A. Purified catalytic subunit of PP2A, but not PP1 dephosphorylated PDE4D5 in vitro. Co-immunoprecipitation studies demonstrated association of PDE4D5 with PP2A and the association was decreased by the activation of PKC. In conclusion, cAMP levels are cross-regulated by contractile agonists via a mechanism that involves PLC--dependent, PKC-mediated inhibition of PP2A activity that leads to increase in PDE4D5 phosphorylation and activity and inhibition of cAMP levels.