In addition to establishing symbiotic relationships with arbuscular mycorrhizal fungi, legumes also enter into a nitrogen-fixing symbiosis with rhizobial bacteria that results in the formation of root nodules. Several genes involved in the development of both arbuscular mycorrhiza and legume nodulation have been cloned in model legumes. Among them, Medicago truncatula DMI1 (DOESN'T MAKE INFECTIONS1) is required for the generation of nucleus-associated calcium spikes in response to the rhizobial signaling molecule Nod factor. DMI1 encodes a membrane protein with striking similarities to the Methanobacterium thermoautotrophicum potassium channel (MthK). The cytosolic C terminus of DMI1 contains a RCK (regulator of the conductance of K(+)) domain that in MthK acts as a calcium-regulated gating ring controlling the activity of the channel. Here we show that a dmi1 mutant lacking the entire C terminus acts as a dominant-negative allele interfering with the formation of nitrogen-fixing nodules and abolishing the induction of calcium spikes by the G-protein agonist Mastoparan. Using both the full-length DMI1 and this dominant-negative mutant protein we show that DMI1 increases the sensitivity of a sodium- and lithium-hypersensitive yeast (Saccharomyces cerevisiae) mutant toward those ions and that the C-terminal domain plays a central role in regulating this response. We also show that DMI1 greatly reduces the release of calcium from internal stores in yeast, while the dominant-negative allele appears to have the opposite effect. This work suggests that DMI1 is not directly responsible for Nod factor-induced calcium changes, but does have the capacity to regulate calcium channels in both yeast and plants.