Membrane-bound guanylate cyclase-A (GC-A), the receptor for atrial natriuretic factor (ANF), has been shown to be regulated by its kinase-like domain. To resolve the nature of this regulation, we measured the effects of various proteases on the activity of guanylate cyclase in rat lung membranes, and on the activity of the bacterial-expressed catalytic domain (GC-c) and on a recombinant peptide composed of both the kinase-like and catalytic domain (GC-kc) of guanylate cyclase. Pronase increased rat guanylate cyclase activity in a biphasic manner with a maximal effect at about 10-20 microg per assay tube. Thermolysin had effects similar to those of pronase on the activity of guanylate cyclase in rat lung membranes. In the case of bacterial-expressed proteins, pronase increased the activity of GC-kc, but not GC-c. These results indicate that GC-A contains an autoinhibitory site on its kinase-like domain, and that removal of the autoinhibitory site by limited proteolysis leads to enzyme activation. GC-A was poorly activated by ANF and ATP after the rat lung membrane was pretreated with pronase, suggesting that ANF/ATP and pronase activate guanylate cyclase through the same mechanism. It is suggested that the binding of ANF and ATP to GC-A may induce a conformational change of the receptor that releases the inhibitory constraint on enzyme activity leading to enzyme activation.