Sensory transduction in olfactory receptors and photoreceptors is mediated by cyclic nucleotide-activated ion channels. We have studied the gating mechanism in olfactory and rod channels expressed in Xenopus oocytes. We report that the differences in cyclic nucleotide affinity and efficacy between these channels resulted from sequence differences outside the cyclic nucleotide-binding domain, especially in the amino-terminal domain, influencing the free energy of the closed to open allosteric conformational change. In addition, Ni2+ inhibited activation of the olfactory channel, decreasing both the maximum current and the apparent affinity for cyclic nucleotides. Ni2+ exerted its effect by binding preferentially to the closed configuration of the channel, thereby destabilizing the opening conformational change. We have localized this inhibition to a single histidine (H396) following the last transmembrane segment, suggesting a role for this region in channel gating.