The stimulatory G protein (Gs) mediates activation of hormone and neurotransmitter responsive adenylylcyclase (AC). The alpha-subunit (Gsalpha) of heterotrimeric (alphabetagamma) Gs has a guanine nucleotide- binding site and intrinsic GTPase activity. Activation of AC occurs when an agonist~receptor complex promotes the exchange of GDP for GTP in the nucleotide binding site of Gsalpha. Nucleotide exchange causes dissociation of Gsalpha from the betagamma~subunit complex (Gbetagamma). Gsalpha then activates AC until GTP hydrolysis occurs and Gbetagamma reassociates with Gsalpha. This model is widely accepted, and Gs subunit dissociation is a critical part of the model since Gbetagamma plays an important regulatory role in the process. However, recent experimental evidence suggests that this model is incorrect. Gs from bovine brain was activated with GTPgammaS, a non~hydrolyzable GTP analogue. Activation was assayed by reconstitution of AC in Gs deficient S49 cycmembranes. Subunit dissociation was assayed by immunoprecipitating Gsalpha, and determining the amount of Gbeta that was coprecipitated. Using these assays, it was determined that high concentrations of MgCl2 caused Gs subunits to dissociate in solution, but activation of Gs by binding GTPgammaS at physiological concentrations of MgCl2 did not. The bacterial toxin choleragen (CT) catalyticaly transfers the ADP~ribose moiety of NAD to Gsalpha. When Gsalpha was dissociated from Gbetagamma by high concentrations of MgCl2 it could not be ADP~ribosylated by CT whether or not GTPgammaS was bound to Gsalpha. Consequently, the Gs heterotrimer but not the free Gsalpha subunit is a substrate for CT. This makes CT useful for monitoring Gs heterotrimer formation in biological membranes. When the N~terminus of Gsalpha was modified by the addition of 23 amino acids it was able to bind GTPgammaS. When the modified Gsalpha was used to reconstitute S49 cycmembranes it could not be ADP~ribosylated by CT and it was unable to activate AC. Proteolytic removal of the modifying peptide restored both Gsalpha's ability to be ADP~ribosylated by CT and to activate AC. These data suggest that activated Gs heterotrimer and not the free Gsalpha~subunit mediates agonist stimulation of AC.