Antibiotic-producing Streptomyces use the diadenylate cyclase DisA to synthesize the nucleotide second messenger c-di-AMP, but the mechanism for terminating c-di-AMP signaling and the proteins that bind the molecule to effect signal transduction are unknown. Here, we identify the AtaC protein as a c-di-AMP-specific phosphodiesterase that is also conserved in pathogens such as Streptococcus pneumoniae and Mycobacterium tuberculosis AtaC is monomeric in solution and binds Mn2+ to specifically hydrolyze c-di-AMP to AMP via the intermediate 5'-pApA. As an effector of c-di-AMP signaling, we characterize the RCK_C domain protein CpeA. c-di-AMP promotes interaction between CpeA and the predicted cation/proton antiporter, CpeB, linking c-di-AMP signaling to ion homeostasis in Actinobacteria. Hydrolysis of c-di-AMP is critical for normal growth and differentiation in Streptomyces, connecting ionic stress to development. Thus, we present the discovery of two components of c-di-AMP signaling in bacteria and show that precise control of this second messenger is essential for ion balance and coordinated development in Streptomyces.