FK-506 and cyclosporin A (CsA) are potent immunosuppressive agents used clinically to prevent tissue rejection. Interest in the development of more effective immunosuppressive drugs has led to an intense effort toward understanding their biochemical mechanism of action with the result that these compounds have now become powerful tools used in deciphering the signal transduction events in T lymphocyte activation. Although chemically unrelated, FK-506 and CsA exert nearly identical biological effects in cells by inhibiting the same subset of early calcium-associated events involved in lymphokine expression, apoptosis, and degranulation. FK-506 binds to a family of intracellular receptors termed the FK-506 binding proteins (FKBPs). CsA binds to another family of intracellular receptors, the cyclophilins (Cyps), distinct from the FKBPs. The similarities between the mechanisms of action of CsA and FK-506 converge upon the calcium- and calmodulin-dependent serine-threonine protein phosphatase calcineurin (CaN). Both the FKBP/FK-506 complex and the Cyp/CsA complex can bind to calcineurin, thereby inhibiting its phosphatase activity. Calcineurin, a component of the signal transduction pathway resulting in IL-2 expression, catalyzes critical dephosphorylation events required for early lymphokine gene transcription.