Phototransduction in Drosophila is a phosphoinositide-mediated signalling pathway. Phosphatidylinositol 4,5-bisphosphate (PIP2) plays a central role in this process, and its levels are tightly regulated. A photoreceptor-specific form of the enzyme CDP-diacylglycerol synthase (CDS), which catalyzes the formation of CDP-diacylglycerol from phosphatidic acid, is a key regulator of the amount of PIP2 available for signalling. cds mutants develop light-induced retinal degeneration. We report here the isolation and characterization of two murine genes encoding this enzyme, Cds1 and Cds2. The genes encode proteins that are 73% identical and 92% similar but exhibit very different expression patterns. Cds1 shows a very restricted expression pattern but is expressed in the inner segments of the photoreceptors whilst Cds2 shows a ubiquitous pattern of expression. Using fluorescent in situ hybridization we have mapped Cds1 and Cds2 to chromosomes 5E3 and 2G1 respectively. These are regions of synteny with the corresponding human gene localization (4q21 and 20p13). Transient transfection experiments with epitope tagged proteins have also demonstrated that both are associated with the endoplasmic reticulum.