The nuclear factor of activated T cells (NFAT) transcription factor is implicated in expression of the cytokine interleukin-2 (IL-2). Binding sites for NFAT are located in the IL-2 promoter. Furthermore, pharmacological studies demonstrate that the drug cyclosporin A inhibits both NFAT activation and IL-2 expression. However, targeted disruption of the NFAT1 and NFAT2 genes in mice does not cause decreased IL-2 secretion. The role of NFAT in IL-2 gene expression is therefore unclear. Here we report the construction of a dominant-negative NFAT mutant (dnNFAT) that selectively inhibits NFAT-mediated gene expression. The inhibitory effect of dnNFAT is mediated by suppression of activation-induced nuclear translocation of NFAT. Expression of dnNFAT in cultured T cells caused inhibition of IL-2 promoter activity and decreased expression of IL-2 protein. Similarly, expression of dnNFAT in transgenic mice also caused decreased IL-2 gene expression. These data demonstrate that NFAT is a critical component of the signaling pathway that regulates IL-2 expression.