The Drosophila retinal degeneration B (rdgB) gene encodes an integral membrane protein involved in phototransduction and prevention of retinal degeneration. RdgB represents a nonclassical phosphatidylinositol transfer protein (PITP) as all other known PITPs are soluble polypeptides. Our data demonstrate roles for RdgB in proper termination of the phototransduction light response and dark recovery of the photoreceptor cells. Expression of RdgB's PITP domain as a soluble protein (RdgB-PITP) in rdgB2 mutant flies is sufficient to completely restore the wild-type electrophysiological light response and prevent the degeneration. However, introduction of the T59E mutation, which does not affect RdgB-PITP's phosphatidylinositol (PI) and phosphatidycholine (PC) transfer in vitro, into the soluble (RdgB-PITP-T59E) or full-length (RdgB-T59E) proteins eliminated rescue of retinal degeneration in rdgB2 flies, while the light response was partially maintained. Substitution of the rat brain PITPα, a classical PI transfer protein, for RdgB's PITP domain (PITPα or PITPα-RdgB chimeric protein) neither restored the light response nor maintained retinal integrity when expressed in rdgB2 flies. Therefore, the complete repertoire of essential RdgB functions resides in RdgB's PITP domain, but other PITPs possessing PI and/or PC transfer activity in vitro cannot supplant RdgB function in vivo. Expression of either RdgB-T59E or PITPα-RdgB in rdgB+ flies produced a dominant retinal degeneration phenotype. Whereas RdgB-T59E functioned in a dominant manner to significantly reduce steady-state levels of rhodopsin, PITPα-RdgB was defective in the ability to recover from prolonged light stimulation and caused photoreceptor degeneration through an unknown mechanism. This in vivo analysis of PITP function in a metazoan system provides further insights into the links between PITP dysfunction and an inherited disease in a higher eukaryote.