Ryanodine and inositol 1,4,5-trisphosphate (IP3) receptors - two related families of Ca2+ channels responsible for release of Ca2+ from intracellular stores [1] - are biphasically regulated by cytosolic Ca2+ [2-4], it is thought that the resulting positive feedback allows localised Ca2+ release events to propagate regeneratively, and that the negative feedback limits the amplitude of individual events [5,6]. Stimulation of IP3 receptors by Ca2+ occurs through a Ca2+ binding site that becomes exposed only after in, has bound to its receptor [7,8]. Here, we report that rapid inhibition of IP3 receptors by Ca2+ occurs only if the receptor has not bound IP3. The IP3, therefore switches its receptor from a state in which only an inhibitory Ca2+-binding site is accessible to one in which only a stimulatory site is available. This regulation ensures that Ca2+ released by an active IP3 receptor may rapidly inhibit its unliganded neighbours, but it cannot terminate the activity of a receptor with IP3 bound. Such lateral inhibition, which is a universal feature of sensory systems where it improves contrast and dynamic range, may fulfil similar roles in intracellular Ca2+ signalling by providing increased sensitivity to in, and allowing rapid graded recruitment of IP3 receptors.