Guanylyl cyclase activating protein (GCAP1) has been proposed to act as a calcium-dependent regulator of retinal photoreceptor guanylyl cyclase (GC) activity. Using immunocytochemical and biochemical methods, we show here that GCAP1 is present in rod and cone photoreceptor outer segments where phototransduction occurs. Recombinant and native GCAP1 activate recombinant human retGC (outer segment-specific GC) and endogenous GC(s) in rod outer segment (ROS) membranes at low calcium. In addition, we isolate and clone a retinal homolog, termed GCAP2, that shows approximately 50% identity with GCAP1. Like GCAP1, GCAP2 activates photoreceptor GC in a calcium-dependent manner. Both GCAP1 and GCAP2 presumably act on GCs by a similar mechanism; however, GCAP1 specifically localizes to photoreceptor outer segments, while in these experiments GCAP2 was isolated from extracts of retina but not ROS. These results demonstrate that GCAP1 is an activator of ROS GC, while the finding of a second activator, GCAP2, suggests that a similar mechanism of GC regulation may be present in outer segments, other subcellular compartments of the photoreceptor, or other cell types.