The optic lobe of squid (Loligo pealei) contains FMRFamide receptors that can bind an iodinated FMRFamide analog: [125I]-desaminoTyr-Phe- norLeu-Arg-Phe-amide ([125I]-daYFnLRFa). Radioligand binding assays revealed that squid FMRFamide receptors are specific, saturable, high affinity sites (Kd = 0.15 nM) densely concentrated in optic lobe membranes (Bmax = 237 fmole/mg protein). The receptors appeared to be coupled to Gs because guanine nucleotides inhibit receptor binding and the stimulation of adenylate cyclase by FMRFamide is GTP-dependent. Both the binding and cyclase data showed that FMRFamide, but not FMRF-OH, interacts at FMRFamide receptors; thus the C-terminal Arg-Phe-amide is critical for binding. The high binding affinity of FMRFamide (0.4 nM IC50) was specific for FMRFamide-like peptides. The structure-activity relations of many FMRFamide analogs were defined in detail and were nearly identical for both the membrane-bound and detergent-solubilized receptors. We also found that squid optic lobe contains FMRFamide-like reactivity as measured with both a radioimmunoassay and a radioreceptor assay. Moreover, we have sequenced a fragment of genomic DNA that encodes a FMRFamide precursor. Our findings in sum suggest that FMRFamide is a neurotransmitter in squid optic lobe, and that this tissue is a good source from which to purify FMRFamide receptors.