Phototransduction in Limulus photoreceptors involves a G protein-mediated activation of phospholipase C (PLC) and subsequent steps involving InsP 3 -mediated release of intracellular Ca 2؉ . While exploring the role of calmodulin in this cascade, we found that intracellular injection of Ca 2؉ ͞calmodulin-binding peptides (CCBPs) strongly inhibited the light response. By chemically exciting the cascade at various stages, we found the primary target of this effect was not in late stages of the cascade but rather at the level of G protein and PLC. That PLC␦ 1 contains a calmodulin-like structure raised the possibility that PLC might be directly affected by CCBPs. To test this possibility, in vitro experiments were conducted on purified PLC. The activity of this enzyme was strongly inhibited by CCBPs and also inhibited by calmodulin itself. Our results suggest that the calmodulin-like region of PLC has an important role in regulating this enzyme.Phototransduction in Limulus photoreceptors is a complex excitation cascade that has sufficient amplification to produce large electrical events to single photons (1). The initial stage of this cascade resembles the rhodopsin͞G protein interaction found in vertebrate photoreceptors, but the enzyme activated by G protein is phosphoinositide-specific phospholipase C (PLC) rather than cGMP-phosphodiesterase. PLC, in turn, generates InsP 3 (2), and the resulting InsP 3 -mediated Ca 2ϩ release (3-5) leads to activation of nonspecific cation channels (2, 6), perhaps through an intermediate step involving cGMP (7,8).Invertebrate photoreceptors contain a high concentration of calmodulin (9). In the region of the photoreceptor specialized for phototransduction, the microvillar region, the concentration may be as high as 0.5 mM (10). Because the light-induced elevation of Ca 2ϩ plays an obligatory role in the excitation process in Limulus (11), we suspected that a calmodulindependent process might play an important role in a late stage of the excitation process, perhaps coupling the InsP 3 -mediated elevation of Ca 2ϩ to the opening of ion channels. If this were the case, calmodulin peptide antagonists should reduce the response to light. The experiments reported here show Ca 2ϩ ͞ calmodulin peptide antagonists do indeed have this effect. However our results show that the primary site of this effect is not at a late stage of transduction but rather an early stage involving PLC.PLC isoforms are found in all eukaryotic cells and are involved in signal transduction, including sensory, learningrelated synaptic plasticity, and oncogenesis (for reviews see refs. 12 and 13). Recently, the crystal structure of PLC␦ 1 has been obtained (14). This structure revealed EF-hand domains that resemble the structure of calmodulin with Ca 2ϩ bound (the ''calmodulin-like'' domain). Sequence alignment and ␣-helix prediction suggest the existence of similar structures in all PLC isozymes. The regulatory role of this region is unclear, but it seemed possible from our physiological results that it m...