A photosensing protein directs light energy captured by its chromophore into a photocycle. The protein's structure must accommodate the photocycle and promote the resulting chemical or conformational changes that lead to signal transduction. The 1.4 A crystallographic structure of photoactive yellow protein, determined by multiple isomorphous replacement methods, provides the first view at atomic resolution of a protein with a photocycle. The alpha/beta fold, which differs from the original chain tracing, shows striking similarity to distinct parts of the signal transduction proteins profilin and the SH2 domain. In the dark state structure of photoactive yellow protein, the novel 4-hydroxycinnamyl chromophore, covalently attached to Cys69, is buried within the major hydrophobic core of the protein and is tethered at both ends by hydrogen bonds. In the active site, the yellow anionic form of the chromophore is stabilized by hydrogen bonds from the side chains of Tyr42 and buried Glu46 to the phenolic oxygen atom and by electrostatic complementarity with the positively charged guanidinium group of Arg52. Thr50 further interlocks Tyr42, Glu46, and Arg52 through a network of active site hydrogen bonds. Arg52, located in a concavity of the protein surface adjacent to the dominant patch of negative electrostatic potential, shields the chromophore from solvent and is positioned to form a gateway for the phototactic signal. Overall, the high-resolution structure of photoactive yellow protein supports a mechanism whereby electrostatic interactions create an active site poised for photon-induced rearrangements and efficient protein-mediated signal transduction.