The functional homologues of vertebrate natriuretic peptides (NPs), the plant natriuretic peptides (PNPs), are a novel class of peptidic hormones that signal via guanosine 3',5'-cyclic monophosphate (cGMP) and systemically affect plant salt and water balance and responses to biotrophic plant pathogens. Although there is increasing understanding of the complex roles of PNPs in plant responses at the systems level, little is known about the underlying signaling mechanisms. Here we report isolation and identification of a novel Leucine-Rich Repeat (LRR) protein that directly interacts with A. thaliana PNP, AtPNP-A. In vitro binding studies revealed that the Arabidopsis AtPNP-A binds specifically to the LRR protein, termed AtPNP-R1, and the active region of AtPNP-A is sufficient for the interaction to occur. Importantly, the cytosolic part of the AtPNP-R1, much like in some vertebrate NP receptors, harbors a catalytic center diagnostic for guanylyl cyclases and the recombinant AtPNP-R1 is capable of catalyzing the conversion of guanosine triphosphate to cGMP. In addition, we show that AtPNP-A causes rapid increases of cGMP levels in wild type (WT) leaf tissue while this response is significantly reduced in the atpnp-r1 mutants. AtPNP-A also causes cGMP-dependent net water uptake into WT protoplasts, and hence volume increases, whereas responses of the protoplasts from the receptor mutant are impaired. Taken together, our results suggest that the identified LRR protein is an AtPNP-A receptor essential for the PNP-dependent regulation of ion and water homeostasis in plants and that PNP- and vertebrate NP-receptors and their signaling mechanisms share surprising similarities.