The adenylate cyclase system of the yeast Saccharomyces cerevisiae contains the CYR1 polypeptide, responsible for catalyzing formation of cyclic AMP (cAMP) from ATP, and two RAS polypeptides, which mediate stimulation of cAMP synthesis of guanine nucleotides. By analogy to the mammalian enzyme, models of yeast adenylate cyclase have depicted the enzyme as a membrane protein. We have concluded that adenylate cyclase is only peripherally bound to the yeast membrane, based on the following criteria: (i) substantial activity was found in cytoplasmic fractions; (ii) activity was released from membranes by the addition of 0.5 M NaCl; (iii) in the presence of 0.5 M NaCl, activity in detergent extracts had hydrodynamic properties identical to those of cytosolic or NaCl-extracted enzyme; (iv) antibodies to yeast adenylate cyclase identified a full-length adenylate cyclase in both membrane and cytosol fractions; and (v) activity from both cytosolic fractions and NaCl extracts could be functionally reconstituted into membranes lacking adenylate cyclase activity. The binding of adenylate cyclase to the membrane may have regulatory significance; the fraction of activity associated with the membrane increased as cultures approached stationary phase. In addition, binding of adenylate cyclase to membranes appeared to be inhibited by cAMP. These results indicate the existence of a protein anchoring adenylate cyclase to the membrane. The identity of this protein remains unknown.