Calcineurin, a Ca 2؉ /calmodulin-stimulated protein phosphatase, plays a key role in T-cell activation by regulating the activity of NFAT (nuclear factor of activated T cells), a family of transcription factors required for the synthesis of several cytokine genes. Calcineurin is the target of the immunosuppressive drugs cyclosporin A and FK506 complexed with their cytoplasmic receptors cyclophilin and FKBP12, respectively. In this study we report that calcineurin is also the target of a recently identified Ca 2؉ -binding protein, CHP (for calcineurin homologous protein), which shares a high degree of homology with the regulatory B subunit of calcineurin and with calmodulin. In Jurkat and HeLa cells, overexpression of CHP specifically impaired the nuclear translocation and transcriptional activity of NFAT but had no effect on AP-1 transcriptional activity and only a small (<25%) inhibitory effect on the transcriptional activity of NFB. Further study indicated that CHP inhibits calcineurin activity. In cells overexpressing CHP, the phosphatase activity of immunoprecipitated calcineurin was inhibited by ϳ50%; and in a reconstituted assay, the activity of purified calcineurin was inhibited up to 97% by the addition of purified recombinant CHP in a dose-dependent manner. Moreover, prolonged activation of Jurkat cells was associated with a decreased abundance of CHP, suggesting a possible regulatory mechanism allowing activation of calcineurin. CHP, therefore, is a previously unrecognized endogenous inhibitor of calcineurin activity.Stimulation of T cells results in the induction of several cytokine genes that are involved in the control of T-cell proliferation and immune responses (1-3). One of the signaling pathways mediating T-cell receptor activation involves the elevation of intracellular calcium ([Ca 2ϩ ] i ) and the activation of a key signaling enzyme, calcineurin (4, 5). A rise in [Ca 2ϩ ] i leads to the activation of calcineurin and the dephosphorylation and nuclear translocation of NFAT (nuclear factor of activated T cells).1 This in turn drives transcription of response genes such as the cytokines interleukin (IL)-2 and IL-4 and the CD44 ligand (6 -11). Calcineurin is a heterodimeric enzyme consisting of a catalytic A subunit (CnA) and a tightly associated Ca 2ϩ -binding regulatory B subunit (CnB) (12, 13). Maximal calcineurin phosphatase activity requires the Ca 2ϩ -dependent binding of calmodulin (CaM) to the CnA-CnB complex at a domain independent of the CnB-binding site on CnA (14).We recently identified a novel, ubiquitously expressed, Ca 2ϩ -binding protein, CHP (for calcineurin homologous protein), which shares a high degree of similarity with CnB (65%) and CaM (59%) (15). Although CHP was originally identified by screening a library to detect proteins that interacted with the Na ϩ /H ϩ exchanger isoform NHE1, subsequent studies indicated that CHP has actions that are independent of its regulation of NHE1. Overexpression of CHP in mutant NHE-deficient fibroblasts inhibits cell proliferation, ...