Phosducin is a photoreceptor-specific protein known to interact with the beta gamma subunits of G proteins. In pursuit of the function of phosducin, we tested the hypothesis that it regulates the light-driven translocation of G protein transducin from the outer segments of rod photoreceptors to other compartments of the rod cell. Transducin translocation has been previously shown to contribute to rod adaptation to bright illumination, yet the molecular mechanisms underlying the translocation phenomenon remain unknown. In this study we provide two major lines of evidence in support of the role of phosducin in transducin translocation. First, we have demonstrated that transducin beta gamma subunits interact with phosducin along their entire intracellular translocation route, as evident from their co-precipitation in serial tangential sections from light-adapted but not dark-adapted retinas. Second, we generated a phosducin knockout mouse and found that the degree of light-driven transducin translocation in the rods of these mice was significantly reduced as compared with that observed in the rods of wild type animals. In knockout animals the translocation of transducin beta gamma subunits was affected to a larger degree than the translocation of the alpha subunit. We also found that the amount of phosducin in rods is sufficient to interact with practically all of the transducin present in these cells and that the subcellular distribution of phosducin is consistent with that of a soluble protein evenly distributed throughout the entire rod cytoplasm. Together, these data indicate that phosducin binding to transducin beta gamma subunits facilitates transducin translocation. We suggest that the mechanism of phosducin action is based on the reduction of transducin affinity to the membranes of rod outer segments, achieved by keeping the transducin beta gamma subunits apart from the alpha subunit. This increased solubility of transducin would make it more susceptible to translocation from the outer segments.