This report defines the identity of a calcium-regulated membrane guanylate cyclase transduction system in the cilia of olfactory sensory neurons, which is the site of odorant transduction. The membrane fraction of the neuroepithelial layer of the rat exhibited Ca(2+)-dependent guanylate cyclase activity, which was eliminated by the addition of EGTA. This indicated that the cyclase did not represent a rod outer segment guanylate cyclase (ROS-GC), which is inhibited by free Ca(2+). This interpretation was supported by studies with the Ca(2+) binding proteins, GCAPs (guanylate cyclase activating proteins), which stimulate photoreceptor ROS-GC in the absence of Ca(2+). They did not stimulate the olfactory neuroepithelial membrane guanylate cyclase. The olfactory neuroepithelium contained a Ca(2+) binding protein, neurocalcin, which stimulated the cyclase in a Ca(2+)-dependent fashion. The cyclase was cloned from the neuroepithelium and was found to be identical in structure to that of the previously cloned cyclase termed GC-D. The cyclase was expressed in a heterologous cell system, and was reconstituted with its Ca(2+)-dependent activity in the presence of recombinant neurocalcin. The reconstituted cyclase mimicked the native enzyme. Immunocytochemical studies showed that the guanylate cyclase coexists with neurocalcin in the apical region of the cilia. Deletion analysis showed that the neurocalcin-regulated domain resides at the C-terminal region of the cyclase. The findings establish the biochemical, molecular, and functional identity of a novel Ca(2+)-dependent membrane guanylate cyclase transduction system in the cilia of the olfactory epithelium, suggesting a mechanism of the olfactory neuroepithelial guanylate cyclase regulation fundamentally distinct from the phototransduction-linked ROS-GC.