Myogenic cell differentiation is induced by Arg(8)-vasopressin, whereas high cAMP levels and protein kinase A (PKA) activity inhibit myogenesis. We investigated the role of type 4 phosphodiesterase (PDE4) during L6-C5 myoblast differentiation. Selective PDE4 inhibition resulted in suppression of differentiation induced by vasopressin. PDE4 inhibition prevented vasopressin-induced nuclear translocation of the muscle-specific transcription factor myogenin without affecting its overall expression level. The effects of PDE4 inhibition could be attributed to an increase of cAMP levels and PKA activity. RNase protection, reverse transcriptase PCR, immunoprecipitation, Western blot, and enzyme activity assays demonstrated that the PDE4D3 isoform is the major PDE4 expressed in L6-C5 myoblasts and myotubes, accounting for 75% of total cAMP-hydrolyzing activity. Vasopressin cell stimulation caused a biphasic increase of PDE4 activity, which peaked at 2 and 15 min and remained elevated for 48 h. In the continuous presence of vasopressin, cAMP levels and PKA activity were lowered. PDE4D3 overexpression increased spontaneous and vasopressin-dependent differentiation of L6-C5 cells. These results show that PDE4D3 plays a key role in the control of cAMP levels and differentiation of L6-C5 cells. Through the modulation of PDE4 activity, vasopressin inhibits the cAMP signal transduction pathway, which regulates myogenesis possibly by controlling the subcellular localization of myogenin.