Cyclic nucleotide-gated ionic channels in photoreceptors and olfactory sensory neurons are activated by binding of cGMP or cAMP to a receptor site on the channel polypeptide. By site-directed mutagenesis and functional expression of bovine wild-type and mutant channels in Xenopus oocytes, we have tested the hypothesis that an alanine/threonine difference in the cyclic nucleotide-binding site determines the specificity of ligand binding, as has been proposed for cyclic nucleotide-dependent protein kinases [Weber, I.T., Shabb, J.B. & Corbin, J.D. (1989) Biochemistry 28, 6122-6127]. The wild-type olfactory channel is approximately 25-fold more sensitive to both cAMP and cGMP than the wild-type rod photoreceptor channel, and both channels are 30- to 40-fold more sensitive to cGMP than to cAMP. Substitution of the respective threonine by alanine in the rod photoreceptor and olfactory channels decreases the cGMP sensitivity of channel activation 30-fold but little affects activation by cAMP. Substitution of threonine by serine, an amino acid that also carries a hydroxyl group, even improves cGMP sensitivity of the wild-type channels 2- to 5-fold. We conclude that the hydroxyl group of Thr-560 (rod) and Thr-537 (olfactory) forms an additional hydrogen bond with cGMP, but not cAMP, and thereby provides the structural basis for ligand discrimination in cyclic nucleotide-gated channels.