Most Ca2+-permeable ion channels are inhibited by increases in the intracellular Ca2+ concentration ([Ca2+]i), thus preventing potentially deleterious rises in [Ca2+]i. In this study, we demonstrate that currents through the osmo-, heat- and phorbol ester-sensitive, Ca2+-permeable nonselective cation channel TRPV4 are potentiated by intracellular Ca2+. Spontaneous TRPV4 currents and currents stimulated by hypotonic solutions or phorbol esters were reduced strongly at all potentials in the absence of extracellular Ca2+. The other permeant divalent cations Ba2+ and Sr2+ were less effective than Ca2+ in supporting channel activity. An intracellular site of Ca2+ action was supported by the parallel decrease in spontaneous currents and [Ca2+]i on removal of extracellular Ca2+ and the ability of Ca2+ release from intracellular stores to restore TRPV4 activity in the absence of extracellular Ca2+. During TRPV4 activation by hypotonic solutions or phorbol esters, Ca2+ entry through the channel increased the rate and extent of channel activation. Currents were also potentiated by ionomycin in the presence of extracellular Ca2+. Ca2+-dependent potentiation of TRPV4 was often followed by inhibition. By mutagenesis, we localized the structural determinant of Ca2+-dependent potentiation to an intracellular, C-terminal calmodulin binding domain. This domain binds calmodulin in a Ca2+-dependent manner. TRPV4 mutants that did not bind calmodulin lacked Ca2+-dependent potentiation. We conclude that TRPV4 activity is tightly controlled by intracellular Ca2+. Ca2+ entry increases both the rate and extent of channel activation by a calmodulin-dependent mechanism. Excessive increases in [Ca2+]i via TRPV4 are prevented by a Ca2+-dependent negative feedback mechanism.