Granulocyte-macrophage colony-stimulating factor (GM-CSF) is a major regulator of monocyte to macrophage differentiation. In both humans and mice, the main phenotype of decreased GM-CSF function is pulmonary proteinosis due to aberrant function of alveolar macrophages. Recently, this cytokine has been shown to up-regulate a cyclic nucleotide phosphodiesterase, PDE1B. Two PDE1B variants with unique N-terminal sequences, PDE1B1 and PDE1B2, have been identified. Here, we report that the previously uncharacterized PDE1B2 is selectively increased by GM-CSF by stimulation of transcription at a previously unknown transcriptional start site. Analysis of the exon and intron organization of the PDE1B gene reveals that PDE1B2 has a different N-terminal sequence because of a separate first exon that is located 11.5 kb downstream from the PDE1B1 first exon. By using 5'-RACE, alignment of EST sequences, and a luciferase-reporter system, we provide evidence that PDE1B2 has a separate transcriptional start site from PDE1B1 that can be activated by monocyte differentiation. Furthermore, IL-4 treatment in the presence of GM-CSF, which shifts the differentiation from a macrophage to a dendritic cell phenotype, suppresses the up-regulation of PDE1B2. Induction of PDE1B2 is also found in T cells upon activation by PHA. Therefore, PDE1B2 may have a regulatory role in multiple immune cell types. Last, characterization of the catalytic properties of recombinant PDE1B2 shows that it prefers cGMP over cAMP as a substrate and, thus, is likely to regulate cGMP in macrophages. Also, PDE1B2 has a nearly 3-fold lower EC(50) for activation by calmodulin than PDE1B1.