Physiological activation of kainate receptors and GABA-B receptors within the pedunculopontine tegmentum (PPT) is involved in regulation of rapid eye movement (REM) sleep. Since these two types of receptors may also directly and/or indirectly activate the intracellular cyclic adenosine monophosphate (cAMP) signaling pathway, we hypothesized that this signaling pathway may be involved in the PPT to regulate spontaneous REM sleep. To test this hypothesis, four different doses (0.25, 0.50, 0.75, and 1.0 nmol) of a specific adenylyl cyclase (AC) inhibitor, SQ22536, were microinjected bilaterally (100 nl/site) into the PPT and the effects on REM sleep in freely moving chronically instrumented rats were quantified. By comparing alterations in the patterns of REM sleep following control injections of vehicle or one of the four different doses of SQ22536, the contributions made by each dose of SQ22536 to REM sleep were evaluated. The results demonstrated that the local microinjection of AC inhibitor SQ22536 into the PPT decreased the total amount of REM sleep for three hours and increased slow-wave sleep (SWS) for two hours in a dose-dependent manner. This reduction in REM sleep was due to increased latency and decreased frequency of REM sleep episodes. These results provide evidence that inhibition of AC within the PPT can successfully reduce REM sleep. These findings suggest that activation of the cAMP-signaling pathway within the cholinergic cell compartment of the PPT is an intracellular biochemical/molecular step for generating REM sleep in the freely moving rat.