Pole development is coordinated with the Caulobacter crescentus cell cycle by two-component signaling proteins. We show that an unusual response regulator, PleD, is required for polar differentiation and is sequestered to the cell pole only when it is activated by phosphorylation. Dynamic localization of PleD to the cell pole provides a mechanism to temporally and spatially control the signaling output of PleD during development. Targeting of PleD to the cell pole is coupled to the activation of a C-terminal guanylate cyclase domain, which catalyzes the synthesis of cyclic di-guanosine monophosphate. We propose that the local action of this novel-type guanylate cyclase might constitute a general regulatory principle in bacterial growth and development.