The beta subunit of the cGMP phosphodiesterase (PDE) gene has been identified as the candidate gene for retinal degeneration in the rd mouse. To study the molecular mechanisms underlying degeneration and the potential for gene repair, we have expressed a functional bovine cGMP PDE beta subunit in transgenic rd mice. One transgenic mouse line showed complete photoreceptor rescue across the entire span of the retina. A second independently derived line showed partial rescue in which photoreceptors in the superior but not the inferior hemisphere of the retina were rescued. In the latter animals, intermediate stages of degeneration were observed in the transition zone between rescued and diseased photoreceptors. Pathologic changes in the retina ranged from vesiculation of the basalmost outer segment discs in otherwise structurally intact rod cells to photoreceptors with highly disorganized outer segments and intact inner segments. Totally or partially rescued retinas showed a corresponding restoration of cGMP PDE activity, whereas nonrescued retinas had minimal enzyme activity, characteristic of the rd phenotype. These transgenic animals provide models for studying the molecular basis of retinal degenerative disease and conclusively demonstrate that the phenotype of rd mice is produced by a defect in the beta subunit of cGMP PDE.