Cyclic diguanylic acid (c-di-GMP) is a global second messenger controlling motility and adhesion in bacterial cells. Synthesis and degradation of c-di-GMP is catalyzed by diguanylate cyclases (DGC) and c-di-GMP-specific phosphodiesterases (PDE), respectively. Whereas the DGC activity has recently been assigned to the widespread GGDEF domain, the enzymatic activity responsible for c-di-GMP cleavage has been associated with proteins containing an EAL domain. Here we show biochemically that CC3396, a GGDEF-EAL composite protein from Caulobacter crescentus is a soluble PDE. The PDE activity, which rapidly converts c-di-GMP into the linear dinucleotide pGpG, is confined to the C-terminal EAL domain of CC3396, depends on the presence of Mg2+ ions, and is strongly inhibited by Ca2+ ions. Remarkably, the associated GGDEF domain, which contains an altered active site motif (GEDEF), lacks detectable DGC activity. Instead, this domain is able to bind GTP and in response activates the PDE activity in the neighboring EAL domain. PDE activation is specific for GTP (K(D) 4 microM) and operates by lowering the K(m) for c-di-GMP of the EAL domain to a physiologically significant level (420 nM). Mutational analysis suggested that the substrate-binding site (A-site) of the GGDEF domain is involved in the GTP-dependent regulatory function, arguing that a catalytically inactive GGDEF domain has retained the ability to bind GTP and in response can activate the neighboring EAL domain. Based on this we propose that the c-di-GMP-specific PDE activity is confined to the EAL domain, that GGDEF domains can either catalyze the formation of c-di-GMP or can serve as regulatory domains, and that c-di-GMP-specific phosphodiesterase activity is coupled to the cellular GTP level in bacteria.