The transcription factor Elk-1 is a component of ternary complex factor and regulates gene expression in response to a wide variety of extracellular stimuli. Phosphorylation of the C-terminal domain of Elk-1, especially at serine 383, is important for its transactivation activity. Recently mitogen-activated protein kinases, such as extracellular signal-regulated kinase, stress-activated protein kinase, and p38 mitogen-activated protein kinase have been demonstrated to be Elk-1 kinases. However, negative regulators of Elk-1, such as protein phosphatases, still remain to be identified. Here we report that COS cell lysates were able to dephosphorylate an extracellular signal-regulated kinase-phosphorylated glutathione S-transferase-Elkc fusion protein, including serine 383. The phosphatase activity was inhibited by cyclosporin A (a calcineurin inhibitor) but not by okadaic acid (a PP1 and PP2A inhibitor). Purified calcineurin also could efficiently dephosphorylate glutathione S-transferase-Elkc in vitro. Pretreatment of COS cells with cyclosporin A significantly enhanced epidermal growth factor-induced serine 383 Elk-1 phosphorylation whereas ionomycin inhibited the Elk-1 phosphorylation. These data provide both in vitro and in vivo evidence that calcineurin is the major Elk-1 phosphatase and plays a critical role in Elk-1 regulation. The identification of calcineurin as the major Elk-1 phosphatase may provide a mechanism for Elk-1 regulation by Ca2+ signals as well as a possible biochemical basis for the neurotoxicity and nephrotoxicity of the immunosuppressant drug cyclosporin A.