Cyclic nucleotide-gated (CNG) ion channels mediate sensory signal transduction in photoreceptors and olfactory cells. Structurally, CNG channels are heterotetramers composed of either two or three homologue subunits. Although it is well established that activation is a cooperative process of these subunits, it remains unknown whether the cooperativity is generated by the ligand binding, the gating, or both, and how the subunits interact. In this study, the action of homotetrameric olfactory-type CNGA2 channels was studied in inside-out membrane patches by simultaneously determining channel activation and ligand binding, using the fluorescent cGMP analogue 8-DY547-cGMP as the ligand. At concentrations of 8-DY547-cGMP < 1 microM, steady-state binding was larger than steady-state activation, whereas at higher concentrations it was smaller, generating a crossover of the steady-state relationships. Global analysis of these relationships together with multiple activation time courses following cGMP jumps showed that four ligands bind to the channels and that there is significant interaction between the binding sites. Among the binding steps, the second is most critical for channel opening: its association constant is three orders of magnitude smaller than the others and it triggers a switch from a mostly closed to a maximally open state. These results contribute to unravelling the role of the subunits in the cooperative mechanism of CNGA2 channel activation and could be of general relevance for the action of other ion channels and receptors.