We isolated a cDNA named PAIH encoding a member of the Ih-channel family expressed in olfactory receptor neurons (ORNs) of the spiny lobster Panulirus argus. Functional expression of recombinant PAIH in HEK293 cells generated a slowly activating, noninactivating inward current under whole-cell voltage-clamp to hyperpolarizing voltage steps, the amplitude and activation rate of which increase with increasing hyperpolarization. The channel is weakly selective for K+. Intracellular cAMP or cGMP shifts activation of the current to less negative potentials in a concentration-dependent manner. Finally, the channel is blocked by the Ih-channel blocker ZD7288. An Ih-channel sharing the properties of the recombinant channel occurs in cultured lobster ORNs. PAIH immunoreactivity localizes the protein to the transduction compartment of the ORNs in situ, and selectively applying the blocker to the transduction compartment reduces spontaneous activity in the ORN. Collectively, these results implicate for the first time a functional role for an Ih-channel in olfactory signal transduction.