In olfactory receptor neurons, odorants stimulate production of cAMP, which directly activates cyclic nucleotide-gated (CNG) channels. Olfactory adaptation is thought to result from a rise in intracellular Ca2+. To determine whether inhibition of CNG channels plays a role in adaptation, we have investigated the action of Ca2+ on these channels in inside-out "macro" patches from the dendrite and cilia of catfish olfactory neurons. Internal Ca2+, with a K1/2 of 3 microM, profoundly inhibits CNG channels by shifting the dose-response relationship to higher cAMP levels without altering the maximal response. The inhibition does not appear to result from a direct interaction of Ca2+ with the CNG channel. Thus, the inhibition washes out after excision of the inside-out patch, and Ca2+ does not inhibit the cloned catfish CNG channel expressed in Xenopus oocytes. Hence we propose that a regulatory Ca(2+)-binding protein, distinct from the CNG channel, controls the gain of signal transduction and contributes to olfactory adaptation by decreasing the sensitivity of the CNG channel to cAMP.