The edema factor exotoxin produced by Bacillus anthracis is an adenylyl cyclase that is activated by calmodulin (CaM) at resting state calcium concentrations in infected cells. A C-terminal 60-kDa fragment corresponding to the catalytic domain of edema factor (EF3) was cloned, overexpressed in Escherichia coli, and purified. The N-terminal 43-kDa domain (EF3-N) of EF3, the sole domain of edema factor homologous to adenylyl cyclases from Bordetella pertussis and Pseudomonas aeruginosa, is highly resistant to protease digestion. The C-terminal 160-amino acid domain (EF3-C) of EF3 is sensitive to proteolysis in the absence of CaM. The addition of CaM protects EF3-C from being digested by proteases. EF3-N and EF3-C were expressed separately, and both fragments were required to reconstitute full CaM-sensitive enzyme activity. Fluorescence resonance energy transfer experiments using a double-labeled CaM molecule were performed and indicated that CaM adopts an extended conformation upon binding to EF3. This contrasts sharply with the compact conformation adopted by CaM upon binding myosin light chain kinase and CaM-dependent protein kinase type II. Mutations in each of the four calcium binding sites of CaM were examined for their effect on EF3 activation. Sites 3 and 4 were found critical for the activation, and neither the N- nor the C-terminal domain of CaM alone was capable of activating EF3. A genetic screen probing loss-of-function mutations of EF3 and site-directed mutations based on the homology of the edema factor family revealed a conserved pair of aspartate residues and an arginine that are important for catalysis. Similar residues are essential for di-metal-mediated catalysis in mammalian adenylyl cyclases and a family of DNA polymerases and nucleotidyltransferases. This suggests that edema factor may utilize a similar catalytic mechanism.