The role of hormone receptor lateral mobility in signal transduction was studied using a cellular system in which the receptor mobile fraction could be reversibly modulated to largely varying extents. The G-protein-coupled vasopressin V2-type receptor was labeled in LLC-PK1 renal epithelial cells using a fluorescent analogue of vasopressin, and receptor lateral mobility measured using fluorescence microphotolysis (fluorescence photobleaching recovery). The receptor mobile fraction (f) was ∼0.9 at 37°C and <0.1 at 10°C, in accordance with previous studies. When cells were incubated for 1 h at 4°C without hormone, and then warmed up to 37°C and labeled with the vasopressin analogue, f increased from ∼0.4 to 0.8 over ∼1 h. The apparent lateral diffusion coefficient was not markedly affected by temperature pretreatment. Studies with radiolabeled vasopressin indicated that temperature pretreatment influenced neither receptor number nor binding/internalization kinetics. F-actin staining revealed that temperature change resulted in reversible changes of cytoskeletal structure. The maximal rate of in vivo cAMP production at 37°C in response to vasopressin, but not to forskolin (receptor-independent agonist), was also markedly influenced by premcubation of cells at 4°C, thus paralleling the effects of temperature preincubation on f. A linear correlation between f and maximal cAMP production was observed, suggesting that the receptor mobile fraction is a key parameter in hormone signal transduction in vivo. We conclude that mobile receptors are required to activate G-proteins, and discuss the implications of this for signal transduction mechanisms.