Figure 4. Schematic of enzyme cycle of AC, including enzyme conformation and substrate/products bound.

Figure 1. Overall adenylyl cyclase catalyzed reaction of cAMP and pyrophosphate (PPi) from ATP.

 AC exists in three conformations corresponding to the unactivated form (E), the substrate-free activated form (E*), and the substrate/product bound form (E**) (Fig. 4). Upon binding of activators such as Gsa, forskolin, and the P-site analog, the E state is suspected to undergo a conformational change at the C1/C2 interface to form the E* state, which includes the formation of C1/C2 dimerization. It is also thought that further conformational change occurs upon binding of substrate to allow for catalysis. For correct binding and catalysis, cofactors, such as Mg2+ in transmembrane AC and Mn2+ in soluble AC, are required in pairs. 
 In order for AC to catalyze the conversion of ATP into 3',5'-cAMP, ATP must bind so that the 3'-OH group of the ribose closely approaches the a-phosphorus. The 3'-OH group becomes activated by base catalysis for attack on the a-phosphorus, forming the 3',5',a-phosphorus ring within cAMP and displacing pyrophosphate (Fig. 1). 
Within the active site, residues Asp354, Arg398, Lys938, Arg1011, Asp1018, Asn1025, Arg1029,  and Lys1067 are involved in ATP-Mg2+/Mn2+ binding and catalysis. These residues are brought into correct catalytic position during activator induced dimerization. The adenine ring of ATP binds to a hydrophobic pocket within the active site and is also stabilized by water mediated interaction between the polar amine group and Asn1025. However, the greatest specificity for adenine is determined by hydrogen bonding between the Asp1018 and the adenine N6, as well as hydrogen bonding of Lys938 and the adenine N1.
 To stabilize the remainder of the substrate, Lys1067 binds with one of the negatively charged phosphate groups. The phosphate groups of ATP are also stabilized by two Mg2+/Mn2+ and by Arg398 and Arg1011, which are contributed by C1 and C2, respectively. The two Mg2+/Mn2+ ions are themselves stabilized in position for catalysis by two aspartate residues. However, only one of the two ions is suspected to be directly involved in catalytic action. 
 Based on mutagenesis and kinetic analysis, Asn1025, Arg1029, and Asp354 are the residues most directly involved with catalysis. Arg1029 is thought to be located close to the a-phosphorus. Asn1025 assist Arg1029 in stabilizing the transition state or leaving group. Asp354 is thought to act as a base in deprotonating the 3'-OH group that then attacks the a-phosphorus by nucleophilic attack. This nucleophilic attack by the 3' oxyanion releases pyrophosphate from ATP and forms 3',5'-cAMP.

(see My Adenylyl Cyclase Minireview for more detail and referencing)