Photoactive yellow protein (PYP), isolated from Ectothiorhodospira halophila, is a water soluble, 14 kDa photoreceptor protein with a fully reversible photocycle resembling that of sensory rhodopsin II. We have established the presence of photoactivity in PYP crystals and defined the relaxation kinetics of spectroscopically distinguishable species in quantitative terms. The PYP crystal has a bright yellow color and displays pronounced anisotropic absorption properties. Linear dichroism measurements show that the transition moment of the PYP chromophore makes an angle of 73 degrees (or 107 degrees) with respect to the six-fold crystallographic symmetry axis. The crystal absorbance can be bleached reversibly as indicated by absorption changes. A bleached photostationary state in the crystal can be established via CW laser illumination, and the extent of crystal bleaching is found to be clearly dependent on excitation laser wavelength, intensity and illumination time. These results provide the information for designing time-resolved crystallography experiments in which a minimum perturbation is applied to the PYP crystals. Global exponential fitting shows that the relaxation from the photostationary state in the crystal is biphasic at -4 degrees C; a slower component of 1.4 +/- 0.2 s-1 accounts for 60% of the absorbance change and a faster component of 5.2 +/- 0.9 s-1 for the other 40%. As a control, we found that the kinetics for the same relaxation in solution are well described by one exponential and agree quantitatively with previous studies. The two rate constants observed in the crystal show similar temperature dependences, with activation energies for the slow and fast components of 11.7 +/- 1.2 and 5.5 +/- 2.3 kcal/mol, respectively. However, the amplitudes associated with the two exponents show different and opposite temperature dependence. Our results show that the solution kinetic model is not directly applicable to crystals. A kinetic model consistent with the optical data is important to extract the underlying structural intermediates from the time-resolved X-ray diffraction data obtained in parallel with the optical data described here. We propose an alternative model for the photocycle in the crystal which contains an additional bleached intermediate in parallel with the last long-lived intermediate in the solution model.