The role of guard cell chloroplasts in stomatal function is controversial. It is usually assumed that stomatal closure is preceded by a transient increase in cytosolic free Ca2+ concentration ([Ca2+]cyt) in the guard cells. Here, we provide the evidence that chloroplasts play a critical role in the generation of extracellular Ca2+ ([Ca2+]ext)-induced [Ca2+]cyt transients and stomatal closure in Arabidopsis. CAS (Ca2+ sensing receptor) is a plant-specific putative Ca2+-binding protein that was originally proposed to be a plasma membrane-localized external Ca2+ sensor. In the present study, we characterized the intracellular localization of CAS in Arabidopsis with a combination of techniques, including (i) in vivo localization of green fluorescent protein (GFP) fused gene expression, (ii) subcellular fractionation and fractional analysis of CAS with Western blots, and (iii) database analysis of thylakoid membrane proteomes. Each technique produced consistent results. CAS was localized mainly to chloroplasts. It is an integral thylakoid membrane protein, and the N-terminus acidic Ca2+-binding region is likely exposed to the stromal side of the membrane. The phenotype of T-DNA insertion CAS knockout mutants and cDNA mutant-complemented plants revealed that CAS is essential for stomatal closure induced by external Ca2+. In contrast, overexpression of CAS promoted stomatal closure in the absence of externally applied Ca2+. Furthermore, using the transgenic aequorin system, we showed that [Ca2+]ext-induced [Ca2+]cyt transients were significantly reduced in CAS knockout mutants. Our results suggest that thylakoid membrane-localized CAS is essential for [Ca2+]ext-induced [Ca2+]cyt transients and stomatal closure.