Schizosaccharomyces pombe initiates sexual development in response to nutritional starvation. The level of cAMP in S. pombe cells changed during the transition from exponential growth to stationary phase. It also changed in response to a shift from nitrogen-rich medium to nitrogen-free medium. A decrease of approximately 50% was observed in either case, suggesting that S. pombe cells contain less cAMP when they initiate sexual development. S. pombe cells that expressed the catalytic domain of Saccharomyces cerevisiae adenylyl cyclase from the S. pombe adh1 promoter contained 5 times as much cAMP as the wild type and could not initiate mating and meiosis. These observations, together with previous findings that exogenously added cAMP inhibits mating and meiosis and that cells with little cAMP are highly derepressed for sexual development, strongly suggest that cAMP functions as a key regulator of sexual development in S. pombe. The pde1 gene, which encodes a protein homologous to S. cerevisiae cAMP phosphodiesterase I, was isolated as a multicopy suppressor of the sterility caused by a high cAMP level. Disruption of pde1 made S. pombe cells partially sterile and meiosis-deficient, indicating that this cAMP phosphodiesterase plays an important role in balancing the cAMP level in vivo.