Calcineurin is a Ca2+-calmodulin-regulated protein phosphatase that is the target of the immunosuppressive drugs cyclosporin A and FK506. Calcineurin is a heterodimer composed of a catalytic A and a regulatory B subunit. In previous studies, the calcineurin A homologue was identified and shown to be required for growth at 37 degrees C and hence for virulence of the pathogenic fungus Cryptococcus neoformans. Here, we identify the gene encoding the calcineurin B regulatory subunit and demonstrate that calcineurin B is also required for growth at elevated temperature and virulence. We show that the FKR1-1 mutation, which confers dominant FK506 resistance, results from a 6 bp duplication generating a two-amino-acid insertion in the latch region of calcineurin B. This mutation was found to reduce FKBP12-FK506 binding to calcineurin both in vivo and in vitro. Molecular modelling based on the FKBP12-FK506-calcineurin crystal structure illustrates how this mutation perturbs drug interactions with the phosphatase target. In summary, our studies reveal a central role for calcineurin B in virulence and antifungal drug action in the human fungal pathogen C. neoformans.