Photoactivated rhodopsin (R) catalyses, by repetitively interacting with many copies of a guanosine nucleotide binding protein (transducin), the amplified binding of GTP to transducin molecules which then activate cyclic GMP phosphodiesterase. Electrophysiologists recently have shown that cyclic GMP keeps ion channels in the plasma membrane of the rod outer segment open in darkness, and that light-induced hydrolysis of cyclic GMP leads to closure of the channels and therefore to hyperpolarization of the rod cell. Photoactivated rhodopsin interacts not only with transducin, but with two more proteins: a protein kinase that specifically phosphorylates R (in contrast to dark-adapted rhodopsin) at multiple sites; and an abundant soluble protein of 48 KDal (called 48 K-protein, S-antigen, or arrestin) that specifically binds to phosphorylated R. Phosphorylation partially suppresses the ability of R to catalyze transducin-mediated phosphodiesterase activation even in the absence of arrestin. Binding of arrestin to the phosphorylated R potentiates this inhibitory effect, most probably because arrestin competes with transducin for binding on the phosphorylated R. Phosphorylation, in conjunction with arrestin binding, therefore appears to be a mechanism that terminates the active state of the receptor, R.