Calcineurin is a eukaryotic Ca2+- and calmodulin-dependent serine/threonine protein phosphatase. It is a heterodimeric protein consisting of a catalytic subunit calcineurin A, which contains an active site dinuclear metal center, and a tightly associated, myristoylated, Ca2+-binding subunit, calcineurin B. The primary sequence of both subunits and heterodimeric quaternary structure is highly conserved from yeast to mammals. As a serine/threonine protein phosphatase, calcineurin participates in a number of cellular processes and Ca2+-dependent signal transduction pathways. Calcineurin is potently inhibited by immunosuppressant drugs, cyclosporin A and FK506, in the presence of their respective cytoplasmic immunophilin proteins, cyclophilin and FK506-binding protein. Many studies have used these immunosuppressant drugs and/or modern genetic techniques to disrupt calcineurin in model organisms such as yeast, filamentous fungi, plants, vertebrates, and mammals to explore its biological function. Recent advances regarding calcineurin structure include the determination of its three-dimensional structure. In addition, biochemical and spectroscopic studies are beginning to unravel aspects of the mechanism of phosphate ester hydrolysis including the importance of the dinuclear metal ion cofactor and metal ion redox chemistry, studies which may lead to new calcineurin inhibitors. This review provides a comprehensive examination of the biological roles of calcineurin and reviews aspects related to its structure and catalytic mechanism.