Stimulation of ATP or adenosine receptors causes important physiological changes in retinal pigment epithelial (RPE) cells that may influence their relationship to the adjacent photoreceptors. While RPE cells have been shown to release ATP, the regulation of extracellular ATP levels and the production of dephosphorylated purines is not clear. This study examined the degradation of ATP by RPE cells and the physiological effects of the adenosine diphosphate (ADP) that result. ATP was readily broken down by both cultured human ARPE-19 cells and the apical membrane of fresh bovine RPE cells. The compounds ARL67156 and βγ-mATP inhibited this degradation in both cell types. RT-PCR analysis of ARPE-19 cells found mRNA message for multiple extracellular degradative enzymes; ectonucleotide pyrophosphatase/phosphodiesterase eNPP1, eNPP2, and eNPP3; the ectoATPase ectonucleoside triphosphate diphosphohydrolase NTPDase2, NTPDase3, and some message for NTPDase1. Considerable levels of ADP bathed RPE cells, consistent with a role for NTPDase2. ADP and ATP increased levels of intracellular Ca²⁺. Both responses were inhibited by thapsigargin and P2Y₁ receptor inhibitor MRS 2179. Message for both P2Y₁ and P2Y₁₂ receptors was detected in ARPE-19 cells. These results suggest that extracellular degradation of ATP in subretinal space can result in the production of ADP. This ADP can stimulate P2Y receptors and augment Ca²⁺ signaling in the RPE.