Femtosecond spectroscopy was performed on CO-liganded (fully reduced and mixed-valence states) and O-2-liganded quinol oxidase bd from Escherichia coli. Substantial polarization effects, unprecedented for optical studies of heme proteins, were observed in the CO photodissociation spectra, implying interactions between heme d (the chlorin ligand binding site) and the close-lying heme b(595) on the picosecond time scale; this general result is fully consistent with previous work [Vos, M. H., Borisov, V. B., Liebl, U., Martin, J.-L., and Konstantinov, A. A. (2000) Proc. Natl. Acad. Sci. U.S.A. 97, 15541559]. Analysis of the data obtained under isotropic and anisotropic polarization conditions and additional flash photolysis nanosecond experiments on a mutant of cytochrome bd mostly lacking heme b595 allow to attribute the features in the well-known but unusual CO dissociation spectrum of cytochrome bd to individual heme d and heme b595 transitions. This renders it possible to compare the spectra of CO dissociation from reduced and mixed-valence cytochrome bd under static conditions and on a picosecond time scale in much more detail than previously possible. CO binding/dissociation from heme d is shown to perturb ferrous heme b595, causing induction/loss of an absorption band centered at similar to435 nm. In addition, the CO photodissociation-induced absorption changes at 50 ps reveal a bathochromic shift of ferrous heme b595 relative to the static spectrum. No evidence for transient binding of CO to heme b595 after dissociation from heme d is found in the picosecond time range. The yield of CO photodissociation from heme d on a time scale of INFERIEUR 15 ps is found to be diminished more than 3-fold when heme b(595) is oxidized rather than reduced. In contrast to other known heme proteins, molecular oxygen cannot be photodissociated from the mixed-valence cytochrome bd at all, indicating a unique structural and electronic configuration of the diheme active site in the enzyme.