Ever since the identification of two distinct Ang II receptor subtypes, the function of the AT2 receptor has been a subject of debate. As opposed to the AT1 subtype, this receptor does not interact with G-proteins in most cell lines and tissues. We show here that, in intact PC12W cells which express only AT2 receptors, Ang II significantly decreases basal and atrial natriuretic peptide (ANP)-stimulated cGMP concentration. This effect is mimicked by the AT2 selective agonist CGP 42112, and is not prevented by the AT1 selective antagonist losartan, indicating that this is an AT2 receptor mediated response. The lack of effect of the phosphodiesterase (PDE) inhibitor IBMX shows that this mechanism does not involve PDE stimulation. This is confirmed by the finding that neither Ang II or CGP 42112 affect the Ca++/calmodulin dependent cGMP PDE activity. Furthermore Ang II and CGP 42112 have no effect on nitroprusside-stimulated cGMP levels in these cells, thus ruling out interactions between the AT2 receptor and soluble guanylate cyclase. These data indicate that the AT2 receptor mediated decrease of cGMP is due to the selective inhibition of particulate guanylate cyclase (pGC) activity. In an accompanying paper we report that interaction of Ang II with the AT2 receptor in the same cells results in the stimulation of phosphotyrosine phosphatase (PTPase) activity. Interestingly, the PTPase inhibitors sodium orthovanadate and phenylarsine oxyde, but not the Ser/Thr phosphatase inhibitor okadiac acid, inhibitthe Ang II and CGP 42112 induced decreases in cellular cGMP concentration. These findings suggest that stimulation of PTPase activity may be involved in the regulation of pGC activity via AT2 receptors.