Choleragen exerts its effect on cells through activation of adenylate cyclase. Choleragen initially interacts with cells through binding of the B subunit of the toxin to the ganglioside GM1 on the cell surface. Subsequent events are less clear. Patching or capping of toxin on the cell surface may be an obligatory step in choleragen action. Studies in cell-free systems have demonstrated that activation of adenylate cyclase by choleragen requires NAD. In addition to NAD, requirements have been observed for ATP, GTP, and calcium-dependent regulatory protein. GTP also is required for the expression of choleragen-activated adenylate cyclase. In preparations from turkey erythrocytes, choleragen appears to inhibit an isoproterenol-stimulated GTPase. It has been postulated that by decreasing the activity of a specific GTPase, choleragen would stabilize a GTP-adenylate cyclase complex and maintain the cyclase in an activated state. Although the holotoxin is most effective in intact cells, with the A subunit having 1/20th of its activity and the B subunit (choleragenoid) being inactive, in cell-free systems the A subunit, specifically the A1 fragment, is required for adenylate cyclase activation. The B protomer is inactive. Choleragen, the A subunit, or A1 fragment under suitable conditions hydrolyzes NAD to ADP-ribose and nicotinamide (NAD glycohydrolase activity) and catalyzes the transfer of the ADP-ribose moiety of NAD to the guandino group of arginine (ADP-ribosyltransferase activity). The NAD glycohydrolase activity is similar to that exhibited by other NAD-dependent bacterial toxins (diphtheria toxin, Pseudomonas exotoxin A), which act by catalyzing the ADP-ribosylation of a specific acceptor protein. If the ADP-ribosylation of arginine is a model for the reaction catalyzed by choleragen in vivo, then arginine is presumably an analog of the amino acid which is ADP-ribosylated in the acceptor protein. It is postulated that choleragen exerts its effects on cells through the NAD-dependent ADP-ribosylation of an arginine or similar amino acid in either the cyclase itself or a regulatory protein of the cyclase system.