In the visual and olfactory systems, cyclic nucleotide-gated (CNG) ion channels convert stimulus-induced changes in the internal concentrations of cGMP and cAMP into changes in membrane potential. Although it is known that significant activation of these channels requires the binding of three or more molecules of ligand, the detailed molecular mechanism remains obscure. We have probed the structural changes that occur during channel activation by using sulfhydryl-reactive methanethiosulfonate (MTS) reagents and N-ethylmaleimide (NEM). When expressed in Xenopus oocytes, the alpha-subunit of the bovine retinal channel forms homomultimeric channels that are activated by cGMP with a K1/2 of approximately 100 microM. Cyclic AMP, on the other hand, is a very poor activator; a saturating concentration elicits only 1% of the maximum current produced by cGMP. Treatment of excised patches with MTS-ethyltrimethylamine (MTSET) or NEM dramatically potentiated the channel's response to both cyclic nucleotides. After MTSET treatment, the dose-response relation for cGMP was shifted by over two orders of magnitude to lower concentrations. The effect on channel activation by cAMP was even more striking. After modification, the channels were fully activated by cAMP with a K1/2 of approximately 60 microM. This potentiation was abolished by conversion of Cys481 to a nonreactive alanine residue. Potentiation occurred more rapidly in the presence of saturating cGMP, indicating that this region of the channel is more accessible when the channel is open. Cys481 is located in a linker region between the transmembrane and cGMP-binding domains of the channel. These results suggest that this region of the channel undergoes significant movement during the activation process and is critical for coupling ligand binding to pore opening. Potentiation, however, is not mediated by the recently reported interaction between the amino- and carboxy-terminal regions of the alpha-subunit. Deletion of the entire amino-terminal domain had little effect on potentiation by MTSET.