The reaction catalyzed by all-trans-retinol dehydrogenase of rod outer segments completes the quenching of photoactivated rhodopsin and initiates the cycle of reactions leading to regeneration of visual pigment. The goal of this study was to determine the kinetic parameters of the dehydrogenase at physiological levels of bleaching, to investigate its specificity, and to determine its possible role in modulating phototransduction. Reduction of all-trans-retinal could be measured after bleaching < 0.15% rhodopsin. Kinetic parameters for the forward reaction determined with endogenous all-trans-retinal were Km = 1.1 microM; Vmax = 7 nmol/min/mg rhodopsin. The low enzymatic activity suggests that at high bleach rates, all-trans-retinal could accumulate, increasing the steady state level of bleaching intermediates or promoting formation of pseudophotoproducts. Active pseudophotoproducts, which stimulate Gt activation and opsin phosphorylation by rhodopsin kinase, are formed with opsin and all-trans-retinal as well as retinal analogues lacking the 13 methyl or the terminal two carbons of the polyene chain. Addition of all-trans-retinol, NADP, and [32P]ATP to rod outer segments increased rhodopsin phosphorylation. Kinetic parameters for the reverse reaction determined with exogenous all-trans-retinol were Km = 10 microM; Vmax = 11 nmol/min/mg rhodopsin. Our results support the hypothesis that all-trans-retinol dehydrogenase could influence the phototransduction cascade, including activities of Gt, rhodopsin kinase, and binding of arrestin, by impeding the recycling of rhodopsin at high bleach levels.