Soluble guanylyl cyclase (sGC) catalyzes cGMP synthesis and serves as a physiological receptor for nitric oxide (NO)). Recent evidence indicates that key properties of sGC within cells differ from those of purified sGC. We have devised a technique for resolving NO-stimulated sGC activity in cells on a sub-second time scale, enabling the first quantitative description of the kinetics of the enzyme within its natural environment. Upon release of NO from a caged derivative, sGC became activated without any lag observable at a 20-ms sampling time. Deactivation of sGC on removal of NO occurred with a rate constant of 3.7 s(-1), which is 25-fold faster than the fastest estimate for purified sGC. Desensitization of sGC occurred with a time constant of 6.9 s at an estimated 70 nM NO and became faster at a higher concentration, indicating that NO accelerates desensitization. The concentration-response curve for NO consequently became increasingly bell-shaped with time, a phenomenon that causes the apparent potency of NO to increase with time. The results indicate that sGC within cells behaves in a highly dynamic fashion, allowing the NO-cGMP pathway to operate within a kinetic framework more resembling that of neurotransmission than the properties of purified sGC suggest.