Soluble guanylate cyclase (sGC) is a heterodimeric hemoprotein composed of alpha1 and beta1 subunits. sGC is activated by nitric oxide (NO) and therefore plays a central role in NO signal transduction. Activation of sGC by NO is believed to be mediated by the interaction between NO and the heme of sGC. Spectroscopic and kinetic studies have shown that the heme of sGC is in a unique environment. Characterization of the heme environment is critical to the understanding of the mechanism of NO activation. To approach this goal, the beta1 N-terminal fragment consisting of residues 1-385 [beta1(1-385)] of sGC was expressed in E. coli. beta1(1-385) was then purified to homogeneity in two steps by DEAE ion exchange and gel filtration chromatography. Purified beta1(1-385) was found to contain a stoichiometric amount of heme. The UV-visible spectrum of beta1(1-385) is almost identical to that of the native heterodimeric sGC purified from bovine lung. beta1(1-385) binds both NO and CO, leading to a shift in the Soret maximum from 431 nm to 398 and 423 nm, respectively. These spectral shifts are identical to those observed with heterodimeric sGC purified from bovine lung. These results suggest that the heme in the beta1(1-385) is similar to that in the heterodimeric sGC. Therefore, for the first time, the heme binding region of sGC has been unambiguously localized to the N-terminal region of the beta1 subunit. Our data also suggest that the N-terminal region of the beta1 subunit of sGC is itself sufficient for heme binding.