The calcium ionophore A23187 (IP) inhibited the antidiuretic hormone (ADH)-stimulated hydro-osmotic response in toad urinary bladder but had no effect on the osmotic transfer of water in the absence of hormone. Extracellular calcium was necessary for this effect at lower but not at higher IP concentrations. The hydro-osmotic response to exogenous cyclic AMP was unaltered by IP, but the same response produced by inhibition of phosphodiesterase was reduced significantly. Cyclic AMP concentrations in isolated toad bladder epithelial cells were reduced by 50% with IP or exogenous prostaglandin E2 (PGE2). Indomethacin, a prostaglandin synthesis inhibitor, prevented the inhibitory actions of the IP on the ADH-mediated response. Collectively, these observations suggest a key role for cellular calcium in modulating the actions of antidiuretic hormone and are consistent with the hypothesis that the ionophore, through increasing intracellular calcium, stimulates the synthesis of prostaglandins which have a negative feedback on adenylcyclase. This effect would terminate the action of the hormone.