Odors activate at least two distinct transduction pathways in lobster olfactory receptor cells that, respectively, excite and inhibit the cell. Data presented suggest that odors selectively activate the inhibitory conductance through the second messenger cAMP. Not all cells support both odor-evoked excitatory and inhibitory conductances; in the current investigation, about 50% of the cells tested were inhibited by odors. In the majority of cells that, as a group, support an inhibitory response to odor stimulation, activation of adenylate cyclase with forskolin or inhibition of phosphodiesterase activity with 3-isobutyl-1- methylxanthine (IBMX) elicits an outward current with a time course similar to that of odor-evoked outward currents. The membrane-permeant cyclic nucleotide analogs 8-Br-cAMP and 8-Br-cGMP have a similar effect. Forskolin and IBMX enhance the magnitude of odor-evoked outward currents when the drug and the odor are copresented to the cell. In contrast, these same drugs have little or no effect on cells that, as a group, fail to support an inhibitory response to odor stimulation. This study provides the first direct evidence implicating cAMP in olfactory transduction in an invertebrate and contrasts with similar studies in vertebrates that have implicated cAMP as a second messenger mediating excitation.