Glucose-induced insulin release is decreased in the spontaneously diabetic GK rat, a nonobese rodent model of type 2 diabetes. Forskolin restores the impaired insulin release in both the isolated perfused pancreas and isolated islets from these rats (Abdel-Halim et al., Diabetes 45:934-940, 1996). We demonstrate here that the insulinotropic effect of forskolin in the GK rat is due to increased generation of cAMP and that it is associated with overexpression of adenylyl cyclase (AC)-III mRNA and gene mutations. The AC-III mRNA overexpression was demonstrated by in situ hybridization using oligonucleotide probes binding to different regions of the rat AC-III mRNA. It was associated with the presence of two point mutations identified at positions -28 bp (A --> G) and -358 bp (A --> C) of the promoter region of the AC-III gene and was demonstrable in both GK rat islets and peripheral blood cells. Transfection of COS cells with a luciferase reporter gene system revealed up to 25-fold increased promoter activity of GK AC-III promoter when compared with normal rat promoter (P < 0.0001). In conclusion, forskolin restores the impaired insulin release in islets of the GK rat through enhanced cAMP generation. This is linked to overexpression of AC-III mRNA in GK islets due to two functional point mutations in the promoter region of the AC-III gene.