In lymphocytes, the expression of early immune response genes is regulated by NF-AT transcription factors which translocate to the nucleus after dephosphorylation by the Ca2+-dependent phosphatase, calcineurin. We report here that mice bearing a disruption in the NF-ATc gene fail to develop normal cardiac valves and septa and die of circulatory failure before day 14.5 of development. NF-ATc is first expressed in the heart at day 7.5, and is restricted to the endocardium, a specialized endothelium that gives rise to the valves and septum. Within the endocardium, specific inductive events appear to activate NF-ATc: it is localized to the nucleus only in endocardial cells that are adjacent to the interface with the cardiac jelly and myocardium, which are thought to give the inductive stimulus to the valve primordia. Treatment of wild-type embryos with FK506, a specific calcineurin inhibitor, prevents nuclear localization of NF-ATc. These data indicate that the Ca2+/calcineurin/NF-ATc signalling pathway is essential for normal cardiac valve and septum morphogenesis; hence, NF-ATc and its regulatory pathways are candidates for genetic defects underlying congenital human heart disease.