Pole development is coordinated with the Caulobacter crescentus cell cycle by two-component signaling proteins. We show that an unusual response regulator, PleD, is required for polar differentiation and is sequestered to the cell pole only when it is activated by phosphorylation. Dynamic localization of PleD to the cell pole provides a mechanism to temporally and spatially control the signaling output of PleD during development. Targeting of PleD to the cell pole is coupled to the activation of a C-terminal guanylate cyclase domain, which catalyzes the synthesis of cyclic di-guanosine monophosphate. We propose that the local action of this novel-type guanylate cyclase might constitute a general regulatory principle in bacterial growth and development. During developmental transitions, localized changes of cellular morphology are mediated by adaptation in levels and arrangement of proteins. Temporal and spatial control often relies on the timed synthesis or activation of transcriptional regulators and on the establishment of gradients through the compartmentalization of signaling complexes. Although the regulatory mechanisms of gene expression are relatively well understood, it is often not clear how morphogenetic changes are controlled and coordinated locally. In prokaryotes, the major paradigm for signal transduction is the two-component regulatory system (Parkinson and Kofoid 1992). On signal input, the first component, a sensor kinase, autophosphorylates on a histidine residue. The second component, a soluble response regulator, often functions as a transcriptional regulator. Its phosphorylation by the cognate histidine kinase on a conserved aspartate residue in the N-terminal receiver domain usually results in increased DNA binding affinity (Parkinson and Kofoid 1992). Here we present evidence that a novel-type response regulator acts at a distinct subcellular site where it contributes to local changes in cell morphology through the production of a novel signaling molecule.The unicellular bacterium Caulobacter crescentus goes through an obligate developmental transition that allows it to switch between a sessile, adhesive, and a motile, planktonic cell during its cell cycle. As a consequence, cell poles are continuously remodeled during cell differentiation to facilitate assembly and removal of motility and surface adherence organelles at the right time and in the correct order. Asymmetry is established in the predivisional cell with a single flagellum, a chemotaxis machinery, and pili being assembled at one pole, whereas the opposite pole consists of a stalk and an adhesive organelle, the holdfast (Fig. 1). As a result, division generates two cell types with distinct properties: a surface-attached stalked cell and a motile swarmer cell. The swarmer progeny first differentiates into a stalked cell before it initiates DNA replication and cell division. During this transition the pili retract, flagella are released, and the adhesive organelles are synthesized at the same pole. Here we investigate the function...