Extracellular nucleotides such as ATP, ADP, UTP, UDP, and also diadenosine polyphosphates act as signaling molecules and can be inactivated by hydrolysis via ectonucleotidases. A considerable number of surface-located enzymes can potentially be involved in the extracellular hydrolysis pathway. These include the E-NTPDase family (ectonucleoside triphosphate diphosphohydrolase family), the E-NPP family (ectonucleotide pyrophosphatase/phosphodiesterase family), ecto-5′-nucleotidase, and alkaline phosphatases. In addition, activity of ectonucleoside diphosphokinase can interconvert extracellular nucleotides, and ATP can be used as a cosubstrate of ectoprotein kinase in the phosphorylation of surface-located proteins. Members of the various ectonucleotidase families reveal overlapping substrate specificity and tissue distribution whose functional significance needs to be further elucidated. Considerable progress has been made in the past several years in characterizing novel enzyme species and their molecular and functional properties. First knock-out mice reveal insight into physiological processes governed by the activity of specific ectonucleotidases. Together this work has led to a deeper understanding of the pathways of extracellular nucleotide metabolism, including their interplay with P2 and P1 receptors or also other physiological mechanisms. Drug Dev. Res. 52:44-56, 2001.