Previous work has shown that hyphal elongation in the fungus Neurospora crassa requires a tip-high cytosolic Ca2+ gradient. The source of the Ca2+ appears to be intracellular stores as there is no net transplasma membrane Ca2+ flux at the elongating hyphal tip and modification of ion fluxes across the plasma membrane using voltage clamp is without effect on tip growth. To decode the internal mechanisms which generate and maintain the tip-high Ca2+ gradient we first identified calcium regulators which affect hyphal growth and morphology, then determined how they modify cytosolic [Ca2+] and the actin cytoskeleton using fluorescent dyes and confocal microscopy. Cyclopiazonic acid (a known inhibitor of the endoplasmic reticulum calcium ATPase) inhibits growth and increases cytoplasmic [Ca2+] in the basal region 10-25 microm behind the hyphal tip. 2-APB (2-aminoethoxydiphenyl borate, an inhibitor of IP3-induced Ca2+ release) inhibits hyphal elongation and dissipates the tip-high Ca2 gradient 0-10 microm from the tip. Microinjections of the IP3 receptor agonists adenophostin A and IP3 (but not control microinjections of the biologically inactive L-IP3) transiently inhibited growth and induced subapical branches. IP3 microinjections, but not L-IP3, lowered tip-localized [Ca2+] and increased basal [Ca2+]. Even though their effect on [Ca2+] gradients was different, both cyclopiazonic acid and 2-APB disrupted similarly the normal actin pattern at the hyphal apex. Conversely, disruption of actin with latrunculin B dissipated tip-localized Ca2+. We conclude that the tip-high Ca2+ gradient is generated internally by Ca2+ sequestration into endoplasmic reticulum behind the tip and Ca2+ release via an IP3 receptor from tip-localized vesicles whose location is maintained by the actin cytoskeleton.