The pituitary adenylate cyclase activating polypeptide (PACAP) type I receptor, a seven-domain transmembrane receptor, is positively coupled to both adenylate cyclase and phospholipase C. PACAP exerts neurotrophic effects which are mainly mediated through the cAMP/protein kinase A pathway. Here we show that the cell-permeable C2-ceramide selectively blocks PACAP-activated cAMP production, without affecting phosphoinositide breakdown. Thus by blocking the neuroprotective cAMP signalling pathway, C2-ceramide will reinforce its direct death-inducing signalling. We found that a reactive oxygen species scavenger reversed the C2-ceramide effect and that H2O2 mimicked it. Together these data indicate that reactive oxygen species (ROS) mediates C2-ceramide-induced cAMP pathway uncoupling. This uncoupling did not involve ATP supply or Galphas protein function but rather adenylate cyclase function per se. Further, the tyrosine phosphatase inhibitors, but not the serine/threonine phosphatase inhibitors, prevent inhibition of cAMP production by ROS. This suggests that H2O2 requires a functional tyrosine phosphatase(s) to block PACAP-dependent cAMP production.