Peptides are ubiquitous signaling molecules in animals. Most of the peptide receptors identified so far are G protein-coupled receptors, but peptide-gated Na+ channels have also been cloned. This study investigated the structurefunction relationship of a peptide(FMRFamide)- gated Na+ channel (FaNaC). We focused on three polar residues (Y548, D552, D556) around the outer end of the second transmembrane domain of FaNaC. Site-directed mutagenesis and cysteine modification experiments uncovered that D552 is a critical determinant for various functional aspects of FaNaC, such as activation and desensitization kinetics, apparent FMRFamide sensitivity, channel block by FMRFamide, and current rectification. Double-mutant cycle analysis demonstrated that the interaction between D552 and Y548 regulates both activation and desensitization processes. Although point mutants in D556 were nonfunctional, a double mutant D552N/D556N was functional and showed markedly slow current kinetics. External Ca2+ inhibited the activation and desensitization of FaNaC. These Ca2+ actions were diminished by removal of the negative charge of D552, and notably, the Ca2+ action on desensitization was completely abolished in D552N/D556N, suggesting that D552 and D556 are involved in the Ca2+-binding site. In summary, Y548, D552, and D556 are important sites controlling the gating of FaNaC, and D552 also affects the ion permeation of the channel.