The interleukin‐2 (IL‐2) promoter consists of several independent T cell receptor (TcR) responsive elements. The induction of promoters dependent on these elements is inhibitable by the immunosuppressants cyclosporin A (CsA) and tacrolimus (FK‐506). Calcineurin, a Ca2+/calmodulin‐dependent protein phosphatase, is the FK‐506‐ and CsA‐sensitive enzyme required for TcR mediated activation of the IL‐2 promoter. We report that a constitutively active form of calcineurin partially substitutes for the Ca2+ co‐stimulus required to activate the IL‐2 promoter elements IL‐2A (which binds the factors OAP and Oct‐1) and IL‐2E (which binds NF‐AT), and completely substitutes for the Ca2+ co‐stimulus required to stimulate an NF‐kappa B‐dependent element. Calcineurin stimulates the NF‐kappa B element by enhancing inactivation of I kappa B/MAD3, an inhibitor of NF‐kappa B, thereby increasing the amount of nuclear NF‐kappa B DNA binding activity. These data provide the first demonstration in vivo that activation of a protein phosphatase can inactivate I kappa B, and suggest one possible explanation for mechanism‐based toxicities associated with FK‐506 and CsA by demonstrating that these drugs can inhibit the calcineurin‐dependent activation of a virtually ubiquitous transcription factor.