We have identified a novel isoform of adenylyl cyclase, DAC78C, in Drosophila melanogaster that encodes two structurally distinct proteins in a developmentally restricted manner. The protein corresponding to one transcript is potently activated by G protein and protein kinase C and is expressed ubiquitously. The protein corresponding to the second transcript is expressed in a dynamic pattern in gastrulation stage embryos; it is restricted to the cephalic furrow and dorsal transverse folds, active regions of cell movement of unknown function in the Drosophila embryo. We propose that DAC78C and the cAMP pathway play an important role in directing these morphogenetic movements, and that this gene may provide clues to the functional significance of these structures in gastrulation.