Odor stimulation may excite or inhibit olfactory receptor neurons (ORNs). It is well established that the excitatory response involves a cAMP transduction mechanism that activates a non-selective cationic cyclic nucleotide-gated (CNG) conductance, accompanied by the activation of a Ca²⁺-dependent Cl^- conductance, both causing a depolarizing receptor potential. In contrast, odor inhibition is due to a hyperpolarizing receptor potential. It has been proposed that a Ca²⁺-dependent K⁺ (K_Ca) conductance plays a key role in odor inhibition, both in toad and rat olfactory neurons. The mechanism underlying odor inhibition has remained elusive. We assessed its study using various pharmacological agents and caged compounds for cAMP, Ca²⁺ and InsP₃ on isolated toad ORNs. The odor-triggered K_Ca current was reduced upon exposing the cell either to the CNG channel blocker LY83583 (20 µM) or to the adenylyl cyclase inhibitor SQ22536 (100 µM). Photorelease of caged Ca²⁺ activated a Cl^- current sensitive to niflumic acid (10 µM) and a K⁺ current blockable by charybdotoxin (CTx,20 nM) and iberiotoxin (IbTx, 20 nM). In contrast, photoreleased Ca²⁺ had no effect on cells missing their cilia, indicating that these conductances are confined to the cilia. Photorelease of cAMP induced a CTx-sensitive K⁺ current in intact ORNs. Photorelease of InsP₃ did not increase the membrane conductance of olfactory neurons, arguing against a direct role of InsP₃ in chemotransduction. We conclude that a cAMP cascade mediates the activation of the ciliary Ca²⁺-dependent K⁺ current and that the Ca²⁺ ions that activate the inhibitory current enter the cilia through CNG channels.