Calcineurin is a calcium/calmodulin-regulated phosphatase known for its role in activation of T cells following engagement of the T cell receptor. Calcineurin inhibitors (CNIs) are widely used as immunosuppressive agents; common adverse effects of CNIs are hypertension and hyperkalemia. While previous studies have implicated activation of the Na-Cl cotransporter (NCC) in the renal distal convoluted tubule (DCT) in this toxicity, the molecular mechanism of this effect is unknown. The renal effects of CNIs mimic the hypertension and hyperkalemia that result from germ-line mutations in with-no-lysine (WNK) kinases and the Kelch-like 3 (KLHL3)–CUL3 ubiquitin ligase complex. WNK4 is an activator of NCC and is degraded by binding to KLHL3 followed by WNK4’s ubiquitylation and proteasomal degradation. This binding is prevented by phosphorylation of KLHL3 at serine 433 (KLHL3^S433-P) via protein kinase C, resulting in increased WNK4 levels and increased NCC activity. Mechanisms mediating KLHL3^S433-P dephosphorylation have heretofore been unknown. We now demonstrate that calcineurin expressed in DCT is a potent KLHL3^S433-P phosphatase. In mammalian cells, the calcium ionophore ionomycin, a calcineurin activator, reduces KLHL3^S433-P levels, and this effect is reversed by the calcineurin inhibitor tacrolimus and by siRNA-mediated knockdown of calcineurin. In vivo, tacrolimus increases levels of KLHL3^S433-P, resulting in increased levels of WNK4, phosphorylated SPAK, and NCC. Moreover, tacrolimus attenuates KLHL3-mediated WNK4 ubiquitylation and degradation, while this effect is absent in KLHL3 with S433A substitution. Additionally, increased extracellular K⁺ induced calcineurin-dependent dephosphorylation of KLHL3^S433-P. These findings demonstrate that KLHL3^S433-P is a calcineurin substrate and implicate increased KLHL3 phosphorylation in tacrolimus-induced pathologies.