Cyclic di-AMP (c-di-AMP) is a recently discovered second messenger in bacteria. Most of work on c-di-AMP signaling has been done in Gram-positive bacteria, firmicutes, and actinobacteria, where c-di-AMP signaling pathways affect potassium transport, cell wall structure, and antibiotic resistance. Little is known about c-di-AMP signaling in other bacteria. Borrelia burgdorferi, the causative agent of Lyme disease, is a spirochete that has a Gram-negative dual membrane. In this study, we demonstrated that B. burgdorferi BB0619, a DHH-DHHA1 domain protein (herein designated DhhP), functions as c-di-AMP phosphodiesterase. Recombinant DhhP hydrolyzed c-di-AMP to pApA in a Mn(2+)- or Mg(2+)-dependent manner. In contrast to c-di-AMP phosphodiesterases reported thus far, DhhP appears to be essential for B. burgdorferi growth both in vitro and in the mammalian host. Inactivation of the chromosomal dhhP gene could be achieved only in the presence of a plasmid-encoded inducible dhhP gene. The conditional dhhP mutant had a dramatic increase in intracellular c-di-AMP level in comparison to the isogenic wild-type strain. Unlike what has been observed in Gram-positive bacteria, elevated cellular c-di-AMP in B. burgdorferi did not result in an increased resistance to β-lactamase antibiotics, suggesting that c-di-AMP's functions in spirochetes differ from those in Gram-positive bacteria. In addition, the dhhP mutant was defective in induction of the σ(S) factor, RpoS, and the RpoS-dependent outer membrane virulence factor OspC, which uncovers an important role of c-di-AMP in B. burgdorferi virulence.