Nicotinic acid adenine dinucleotide phosphate (NAADP) is a novel metabolite of NADP that has now been established as a Ca 2؉ messenger in many cellular systems. Its synthesis is catalyzed by multifunctional enzymes, CD38 and ADP-ribosyl cyclase (cyclase). The degradation pathway for NAADP is unknown and no enzyme that can specifically hydrolyze it has yet been identified. Here we show that CD38 can, in fact, hydrolyze NAADP to ADP-ribose 2-phosphate. This activity was low at neutrality but greatly increased at acidic pH. This novel pH dependence suggests that the hydrolysis is determined by acidic residues at the active site. X-ray crystallography of the complex of CD38 with one of its substrates, NMN, showed that the nicotinamide moiety was in close contact with and has since been shown in a wide variety of cell types, from plants to human (reviewed in Refs. 3-5). NAADP is endogenously present in cells and its level is modulated by various agonists and stimuli, establishing its role as a second messenger (Refs. 6 and 7 and reviewed in Refs. 8 and 9). In contrast to the widespread functional activity of NAADP in cells, only two homologous proteins, mammalian CD38 and Aplysia ADP-ribosyl cyclase, have so far been identified as enzymes responsible for the synthesis of NAADP (10). CD38 is a membrane-bound protein first thought of as a lymphocyte antigen (reviewed in Refs. 11-13) but has since been found to be widely expressed in virtually all tissues examined (14 -17). It is present on the cell surface in some cases but is also localized in various intracellular organelles (15, 18 -20). The Aplysia ADP-ribosyl cyclase, on the other hand, is a soluble protein that shares about 30% sequence identity with CD38 (21) and is found in large quantities in the Aplysia ovotestis (22, 23). Both CD38 and the cyclase are novel multifunctional enzymes capable of synthesizing NAADP from NADP by catalyzing the exchange of nicotinamide in NADP with nicotinic acid (10). Both can also cyclize NAD to produce cyclic ADP-ribose (cADPR) (10, 24), another novel Ca 2ϩ messenger (reviewed in Refs. 3-5). The crystal structures of both proteins have been solved (25,26) and the catalytic glutamate residues at their enzymatic active sites identified by site-directed mutagenesis (27,28). Expectedly, a large degree of structural homology is observed between them (26).As a second messenger, NAADP levels in cells are expected to respond to physiological stimuli. Indeed, agonists and stimuli are shown to activate rapid and transient changes in NAADP levels (7,29,30), indicating the presence in cells of efficient pathways for not only the synthesis but also the degradation of NAADP. As a nucleotide, NAADP is sensitive to degradative enzymes, such as nucleotide phosphodiesterase or alkaline phosphatase (31,32). Whether these general enzymes are responsible for its degradation in cells is not known. NAADP is insensitive to regular NADase (32), and so far, no enzyme has yet been identified that can specifically hydrolyze NAADP. Here we show, unexpectedl...