C-type natriuretic peptide activation of guanylyl cyclase B (GC-B), also known as natriuretic peptide receptor B or NPR2, stimulates long bone growth, and missense mutations in GC-B cause dwarfism. Four such mutants (L658F, Y708C, R776W, and G959A) bound 125I-C-type natriuretic peptide on the surface of cells but failed to synthesize cGMP in membrane GC assays. Immunofluorescence microscopy also indicated that the mutant receptors were on the cell surface. All mutant proteins were dephosphorylated and incompletely glycosylated, but dephosphorylation did not explain the inactivation because the mutations inactivated a "constitutively phosphorylated" enzyme. Tunicamycin inhibition of glycosylation in the endoplasmic reticulum or mutation of the Asn-24 glycosylation site decreased GC activity, but neither inhibition of glycosylation in the Golgi by N-acetylglucosaminyltransferase I gene inactivation nor PNGase F deglycosylation of fully processed GC-B reduced GC activity. We conclude that endoplasmic reticulummediated glycosylation is required for the formation of an active catalytic, but not ligand-binding domain, and that mutations that inhibit this process cause dwarfism.