In vertebrate retina, rod outer segment is the site of visual transduction. The inward cationic current in the dark-adapted outer segment is regulated by cyclic GMP. A light flash on the outer segment activates a cyclic GMP phosphodiesterase resulting in rapid hydrolysis of the cyclic nucleotide which in turn causes a decrease in the dark current. Restoration of the dark current requires inactivation of the phosphodiesterase and synthesis of cyclic GMP. The latter is accomplished by the enzyme guanylate cyclase which catalyzes the formation of cyclic GMP from GTP. Therefore, factors regulating the cyclase activity play a critical role in visual transduction. But regulation of the cyclase by some of these factors--phosphodiesterase, ATP, the soluble proteins and metal cofactors (Mg and Mn)--is controversial. The availability of different types of cyclase preparations, dark-adapted rod outer segments with fully inhibited phosphodiesterase activity, partially purified cyclase without PDE contamination, cloned rod outer segment cyclase free of other rod outer segment proteins, permitted us to address these controversial issues. The results show that ATP inhibits the basal cyclase activity but enhances the stimulation of the enzyme by soluble activator, that cyclase can be activated in the dark at low calcium concentrations under conditions where phosphodiesterase activity is fully suppressed, and that greater activity is observed with manganese as cofactor than magnesium. These results provide a better understanding of the controls on cyclase activity in rod outer segments and suggest how regulation of this cyclase by ATP differs from that of other known membrane guanylate cyclases.