The inhibitory protein that binds calmodulin and thus prevents activation of several Ca2+-dependent enzymes by calmodulin is shown to also bind four Ca2+ per mol of protein with high affinity (Kd less than or equal to 10(-6) M). On the basis of its Ca2+- binding properties and its localization to nervous tissue, the inhibitory protein is now called "calcineurin." Calcineurin is composed of two subunits: calcineurin A (61,000 Mr) which interacts with calmodulin in a Ca2+-dependent fashion, and calcineurin B (15,000 Mr) which binds Ca2+. The interaction of calcineurin A with calcineurin B is independent of Ca2+ or Mg2+. The dual interaction of calcineurin A with two different Ca2+-binding components and the high affinity of calcineurin for Ca2+ suggest a possible role for calcineurin in the regulation of free Ca2+ concentrations in the nervous system. Calcineurin may thereby modulate the release and action of neurotransmitters.