Bacteriophytochromes are bacterial photoreceptors that sense red/far red light using the biliverdin chromophore. Most bacteriophytochromes work as photoactivated protein kinases. The Rhodobacter sphaeroides bacteriophytochrome BphG1 is unconventional in that it has GGDEF and EAL output domains, which are involved, respectively, in synthesis (diguanylate cyclase) and degradation (phosphodiesterase) of the bacterial second messenger c-di-GMP. The GGDEF-EAL proteins studied to date displayed either diguanylate cyclase or phosphodiesterase activity but not both. To elucidate the function of BphG1, the holoprotein was purified from an Escherichia coli overexpression system designed to produce biliverdin. The holoprotein contained covalently bound biliverdin and interconverted between the red (dark) and far red (light-activated) forms. BphG1 had c-di-GMP-specific phosphodiesterase activity. Unexpectedly for a photochromic protein, this activity was essentially light-independent. BphG1 expressed in E. coli was found to undergo partial cleavage into two species. The smaller species was identified as the EAL domain of BphG1. It possessed c-di-GMP phosphodiesterase activity. Surprisingly, the larger species lacking EAL possessed diguanylate cyclase activity, which was dependent on biliverdin and strongly activated by light. BphG1 therefore is the first phytochrome with a non-kinase photoactivated enzymatic activity. This shows that the photosensory modules of phytochromes can transmit light signals to various outputs. BphG1 is potentially the first "bifunctional" enzyme capable of both c-di-GMP synthesis and hydrolysis. A model for the regulation of the "opposite" activities of BphG1 is presented.