CD38 catalyzes not only the formation of cyclic ADP-ribose (cADPR) from NAD(+) but also the hydrolysis of cADPR to ADP-ribose (ADPR), and ATP inhibits the hydrolysis (Takasawa, S., Tohgo, A., Noguchi, N., Koguma, T., Nata, K., Sugimoto, T., Yonekura, H., and Okamoto, Il. (1993) J. Biol. Chem. 268, 26052-26054). In the present study, using purified recombinant CD38, we showed that the cADPR hydrolase activity of CD38 was inhibited by ATP in a competitive manner with cADPR. To identify the binding site for ATP and/or cADPR, we labeled the purified CD38 with FSBA. Sequence analysis of the lysylendopeptidase-digested fragment of the labeled CD38 indicated that the FSBA-labeled residue was Lys-129. We introduced site-directed mutations to change the Lys-129 of CD38 to Ala and to Arg. Neither mutant was labeled with FSBA nor catalyzed the hydrolysis of cADPR to ADPR Furthermore, the mutants did not bind cADPR, whereas they still used NAD(+) as a substrate to form cADPR and ADPR. These results indicate that Lys-129 of CD38 participates in cADPR binding and that ATP competes with cADPR for the binding site, resulting in the inhibition of the cADPR hydrolase activity of CD38.