The PKD1 or PKD2 genes encode polycystins (PC) 1 and 2, which are associated with polycystic kidney disease. Previously we demonstrated that PC2 interacts with the inositol 1,4,5-trisphosphate receptor (IP(3)R) to modulate Ca(2+) signaling. Here, we investigate whether PC1 also regulates IP(3)R. We generated a fragment encoding the last six transmembrane (TM) domains of PC1 and the C-terminal tail (QIF38), a section with the highest homology to PC2. Using a Xenopus oocyte Ca(2+) imaging system, we observed that expression of QIF38 significantly reduced the initial amplitude of IP(3)-induced Ca(2+) transients, whereas a mutation lacking the C-terminal tail did not. Thus, the C terminus is essential to QIF38 function. Co-immunoprecipitation assays demonstrated that through its C terminus, QIF38 associates with the IP(3)-binding domain of IP(3)R. A shorter PC1 fragment spanning only the last TM and the C-terminal tail also reduced IP(3)-induced Ca(2+) release, whereas another C-terminal fragment lacking any TM domain did not. Thus, only endoplasmic reticulum-localized PC1 can modulate IP(3)R. Finally, we show that in the polarized Madin-Darby canine kidney cells, heterologous expression of full-length PC1 resulted in a smaller IP(3)-induced Ca(2+) response. Overexpression of the IP(3)-binding domain of IP(3)R reversed the inhibitory effect of PC1, suggesting interaction of full-length PC1 (or its cleavage forms) with endogenous IP(3)R in Madin-Darby canine kidney cells. These results indicate that the behavior of full-length PC1 in mammalian cells is congruent with that of PC1 C-terminal fragments in the oocyte system. These data demonstrate that PC1 inhibits Ca(2+) release, perhaps opposing the effect of PC2, which facilitates Ca(2+) release through the IP(3)R.