Leishmania parasites are exposed to pronounced changes in their environment during their life cycle as they migrate from the sandfly midgut to the insect proboscis and then into the phagolysosomes of the vertebrate macrophages. The developmental transformations that produce each life cycle stage of the parasite may be signaled in part by binding of environmental ligands to receptors which mediate transduction of extracellular signals. We have identified a family of five clustered genes in Leishmania donovani which may encode signal transduction receptors. The coding regions of two of these genes, designated rac-A and rac-B, have been sequenced and shown to code for proteins with an NH2-terminal hydrophilic domain, an intervening putative transmembrane segment, and a COOH-terminal domain that has high sequence identity to the catalytic domain from adenylate cyclases in other eukaryotes. We have expressed the receptor-adenylate cyclase protein (RAC)A protein in Xenopus oocytes and demonstrated that it functions as an adenylate cyclase. Although RAC-B exhibits no catalytic activity when expressed in oocytes, co- expression of RAC-A and RAC-B negatively regulates the adenylate cyclase activity of RAC-A, suggesting that these two proteins interact in the membrane. Furthermore, a truncated version of RAC-A functions as a dominant negative mutant that inhibits the catalytic activity of the wild type receptor. The rac-A and rac-B genes encode developmentally regulated mRNAs which are expressed in the insect stage but not in the mammalian host stage of the parasite life cycle.