Nuclear factor of activated T cells (NF-AT) is the name of a family of four related transcription factors that may be needed for cytokine gene expression in activated lymphocytes. Here we report that mice with a targeted disruption of the NF-ATc gene show an unexpected and dramatic defect in cardiac morphogenesis, with selective absence of the aortic and pulmonary valves, leading to death in utero from congestive heart failure at days 13.5-17.5 of gestation. In contrast, tricuspid and mitral valve morphogenesis is normal. NF-ATc is the first transcription factor known to be expressed only in the endothelial cells of the heart. As in T cells, nuclear translocation of NF-ATc in cardiac endothelial cells is controlled by the calcium-regulated phosphatase calcineurin: NF-ATc remains cytoplasmic in normal embryos cultured with cyclosporin A, an inhibitor of calcineurin. Abnormal development of the cardiac valves and septae is the most frequent form of birth defect, yet few molecular regulators of valve formation are known. Our results indicate that NF-ATc may play a critical role in signal-transduction processes required for normal cardiac valve formation.