A microsomal fraction from rat liver was subfractionated into three rough endoplasmic reticulum fractions RIII, RII and RI, together with a smooth endoplasmic reticulum plus Golgi fraction. Cyclic nucleotide phosphodiesterase activity was found in all fractions. Subsequently it was shown that Golgi fractions were essentially devoid of cyclic AMP phosphodiesterase activity and the activity resided in the smooth endoplasmic reticulum fraction. The activity of the endoplasmic reticulum constituted some 20% of the homogenate activity, with the major fraction of this being associated with the RII fraction and the least with the RI fraction. With the exception of the activity of the RI fraction, which was a peripheral enzyme, all of the other enzyme activities were integral, requiring detergent or repeated freeze-thawing to effect solubilization. All of the activities appeared to be exposed at the external surface of the endoplasmic reticulum, as they were inactivated by trypsin under conditions where glucose 6-phosphatase was not. All of these activities displayed distinct sensitivities to both thermal and trypsin inactivation, yielding activity decays consistent with a single enzyme species being present in each case. The freeze-thaw-solubilized enzymes yielded single symmetrical peaks on sucrose-density-gradient centrifugation and polyacrylamide-gel electrophoresis. The sedimentation coefficients for the enzymes in the smooth-endoplasmic-reticulum-plus-Golgi, RIII, RII and RI fractions were 3.2S, 4.2S, 4.5S and 4.5S respectively. Whereas the activity in the smooth-endoplasmic-reticulum-plus-Golgi fraction exhibited normal Michaelis kinetics, those in the other fractions yielded kinetics indicative of apparent negative co-operativity. All of the enzymes exhibited low Km values towards cyclic AMP. The enzymes did not appear to be regulated by Ca2+ or calmodulin. ZnCl2 was found to be a potent non-competitive inhibitor of the enzyme in all fractions. NaF was a weak non-competitive inhibitor. The bilayer fluidizing agent benzyl alcohol exerted dissimilar effects on the enzyme activities. It is concluded that the endoplasmic reticulum displays lateral heterogeneity, with single, rather distinct, cyclic AMP phosphodiesterases being found in the different fractions.