Extracts obtained from rat hepatocytes incubated with saline, glucagon or insulin were electrophoresed on polyacrylamide gels and then assayed for cyclic (3H)AMP binding capacity. Analysis of the binding patterns demonstrated that glucagon dissociated a holoenzyme of cyclic AMP-dependent protein kinase in a dose-dependent manner. The increase in free regulatory subunits and, hence, in free catalytic subunits explains the activation of this enzyme by glucagon in the liver. Insulin decreased both the amount of cyclic (3H)AMP bound to the holoenzyme and the capacity of the enzyme to be dissociated when the extracts were incubated with increasing concentrations of this cyclic nucleotide. We propose that these insulin-induced effects are determined by an inhibition of the cyclic AMP binding capacity of this protein kinase. This mechanism could account for the inactivation of cyclic AMP-dependent protein kinase that insulin causes in the liver.