Edited by Roger J. Colbran Deficiency of RD3 (retinal degeneration 3) protein causes recessive blindness and photoreceptor degeneration in humans and in the rd3 mouse strain, but the disease mechanism is unclear. Here, we present evidence that RD3 protects photoreceptors from degeneration by competing with guanylyl cyclaseactivating proteins (GCAPs), which are calcium sensor proteins for retinal membrane guanylyl cyclase (RetGC). RetGC activity in rd3/rd3 retinas was drastically reduced but stimulated by the endogenous GCAPs at low Ca 2؉ concentrations. RetGC activity completely failed to accelerate in rd3/rd3GCAPs ؊/؊ hybrid photoreceptors, whose photoresponses remained drastically suppressed compared with the WT. However, ϳ70% of the hybrid rd3/rd3GCAPs ؊/؊ photoreceptors survived past 6 months, in stark contrast to <5% in the nonhybrid rd3/rd3 retinas. GFP-tagged human RD3 inhibited GCAP-dependent activation of RetGC in vitro similarly to the untagged RD3. When transgenically expressed in rd3/rd3 mouse retinas under control of the rhodopsin promoter, the RD3GFP construct increased RetGC levels to near normal levels, restored darkadapted photoresponses, and rescued rods from degeneration. The fluorescence of RD3GFP in rd3/rd3RD3GFP ؉ retinas was mostly restricted to the rod photoreceptor inner segments, whereas GCAP1 immunofluorescence was concentrated predominantly in the outer segment. However, RD3GFP became distributed to the outer segments when bred into a GCAPs ؊/؊ genetic background. These results support the hypothesis that an essential biological function of RD3 is competition with GCAPs that inhibits premature cyclase activation in the inner segment. Our findings also indicate that the fast rate of degeneration in RD3-deficient photoreceptors results from the lack of this inhibition. Production of cGMP in photoreceptors by retinal membrane RetGC 2 (isozymes RetGC1, GUCY2D) and RetGC2 (GUCY2F) (1-3) imparts light sensitivity to vertebrate photoreceptors by maintaining inward cation current via cGMP-gated channels in their outer segments. When light-activated phosphodiesterase hydrolyzes cGMP, rods and cones hyperpolarize by closing the cGMP-gated channels (reviewed in Refs. 4-6). RetGC becomes accelerated after illumination, which allows photoreceptors to recover and adapt to light and then decelerate as photoreceptors recover from the excitation (reviewed in Refs. 7 and 8). Two types of regulatory proteins control RetGC activity in photoreceptors. Calcium sensor proteins (GCAPs) (1, 9-11) stimulate the cyclase in the light and decelerate it in the dark, following the respective decline and rise of free calcium concentrations (12-16). RD3 (retinal degeneration 3) protein (17, 18) enhances RetGC content in photoreceptor outer segment membranes, possibly by promoting the delivery of the enzyme to the outer segment (19, 20). At the same time, RD3 strongly inhibits the cyclase in vitro, by suppressing both the basal and the GCAPstimulated activities of RetGC1 and RetGC2 (21, 22). Truncations of RD3 have bee...