NFAT transcription factors play a key role in the immune response. The activation of NFAT proteins is controlled by calcineurin, the calmodulin-dependent phosphatase that is inhibited by the immunosuppressive drugs cyclosporin A and FK506. Here, we identify a short conserved sequence in NFAT proteins that targets calcineurin to NFAT. Mutation of a single residue in this sequence impairs the calcineurin-mediated dephosphorylation and nuclear translocation of NFAT1. Peptides spanning the region inhibit the ability of calcineurin to bind to and dephosphorylate NFAT proteins, without affecting the phosphatase activity of calcineurin against other substrates. When expressed intracellularly, a corresponding peptide inhibits NFAT dephosphorylation, nuclear translocation, and NFAT-mediated gene expression in response to stimulation. Thus, disruption of the enzyme–substrate docking interaction that directs calcineurin to NFAT can effectively block NFAT-dependent functions.