Methods are described for the parallel assay of prostaglandin E2 synthesis and degradation on a single homogenate. Using these methods, we show that prostaglandin synthesis is located predominantly in the subepithelium whereas the capacity to degrade prostaglandins resides mainly in the epithelial cells. Separation of the epithelial cells into a 'villus to crypt gradient' showed that the capacity to degrade prostaglandins decreased from villus to crypt whereas the responsiveness of the adenylate cyclase to exogenous prostaglandin E2 increased. These findings are discussed in relation to cyclic AMP-mediated, prostaglandin-induced secretion.