It has been proposed that divalent cations activate adenylate cyclase system by lowering the concentration of uncomplexed ATP (ATP4- or HATP3-), considered to be a potent competitive inhibitor of the substrate, MeATP2-. Activation of adenylate cyclase systems by hormones has been suggested to result from the formation of an enzyme state that has a lower affinity for the inhibitory ATP species. In this study, we show that divalent cations, particularly Mn2+ and Mg2+, activate the hepatic adenylate cyclase system through interaction with a metal ion binding site which is independent of the active site which requires MeATP2- for catalysis. Activation by Mg2+ requires concentrations 50- to 100-fold greater than are required with Mn2+, a difference far greater than predicted by the relative stability constants for MnATP2- and MgATP2- if the sole action of the cations was to decrease the concentration of ATP4-. Furthermore, with the use of combinations of Mg2+ and Mn2+, activation is shown to be independent of changes in the ratio of ATP4- (or HATP3-) to MeATP2-. The Km values for MnATP2- and MgATP2- are similar (~50 μM), as are the Vmax values with either cation alone. The activity with combinations of cations at their respective maximally effective concentrations is not additive. Taken together, these findings cast doubt on the notion that uncomplexed ATP is a potent inhibitor and that hormones activate by reducing the affinity of this putative inhibitor. GTP alone, or in combination with glucagon, causes an increase in the apparent affinity of the hepatic system for Mg2+, suggesting that the hormone, nucleotide, and metal ion sites are linked heterotropically. The affinity for Mn2+ is affected similarly by GTP. However, Mn2+ added in excess of 100 μM causes inhibition of glucagon-stimulated, but not guanine nucleotide-stimulated, activity. This observation, coupled with the finding that glucagon, but not guanine nucleotides, sensitizes the enzyme system to adenosine inhibition (7), reveals differences in the hormone- and nucleotide-activated states.