The effect and mode of action of pituitary adenylate cyclase activating polypeptide (PACAP) were studied in rat ileal strips. PACAP relaxed, concentration dependently, rat ileum and was 50 times more potent than the structurally related vasoactive intestinal polypeptide (VIP). The inhibitory action of PACAP was not modified by TTX, omega-conotoxin, adrenergic, or ganglionic blockade, antagonists of adrenoreceptors and muscarinic receptors, indicating a direct myogenic effect probably through specific PACAP receptors. The lack of cross-tachyphylaxis between PACAP and VIP suggests that both peptides act by activation of distinct receptors. Structure-function analysis revealed that the N-terminal region of the PACAP molecule is crucial for biological activity.