The properties of the ac SQUID magnetometer has been analyzed. The results are valid in the low-inductance low-critical-current regime, where the Lri0 producted is belowthe value at which the relation between the enclosed and externally applied magnetic dc flux becomes reentrant. The effects of the screening current circulating in the SQUID ring as well as of the SQUID-ring time constant, tau-Lr/R9 are taken into account. Here LR IS THE SQUID-ring inductance, and R is the shunt resistance in the shunted junction model assumed to describe the weak link. It is shown that for finite values of omegatau, where omega/2pi is the pump frequency, the magnetometer response is due to both the flux dependence of the dispersion and f the dissipation in the tank circuit, and that, generally, the two mechanisms contribute simultaneously. Furthermore, for appropriately chosen ac bias conditions theyt may add constriuctively with the result that the optimal response occurs at a definite and finite value of omegatau. If omegatau is increased beyond this optimal value the weak link behavior is dominated by the Ohmic current channel implying that only if the shunt conductance contains a term depending on the superconducting phase-as the so-called cosine-phji term predicted by tunneling theory-the SQUID will stay sensitivity to magnetic fiels for large omegatau. The influence of the cosine-phi term has been included in the analysis, and as expected it is found to play a significant role particularly fior large omegatau. It is, however, also shown that it is nontrivial to ext ract its magnitude from experiments based on the behavior of the ac SQUID, and that the recently published observations using this technique must be reinterpreted. Journal of Applied Physics is copyrighted by The American Institute of Physics.