Cryptochromes are blue-light receptors that regulate development and the circadian clock in plants and animals. We found that Arabidopsis cryptochrome 2 (CRY2) undergoes blue light-dependent homodimerization to become physiologically active. We identified BIC1 (blue-light inhibitor of cryptochromes 1) as an inhibitor of plant cryptochromes that binds to CRY2 to suppress the blue light-dependent dimerization, photobody formation, phosphorylation, degradation, and physiological activities of CRY2. We hypothesize that regulated dimerization governs homeostasis of the active cryptochromes in plants and other evolutionary lineages.