Calcineurin is a calcium/calmodulin-dependent phosphatase whose activity is required for the induction of T cell lymphokine production and proliferation. Although its specific role in T cell development is less well defined, studies with the immunosuppressive drugs cyclosporin A and FK-506 suggest that it is involved in both positive and negative selection of immature thymocytes. To more completely characterize a role for calcineurin in T cell development in vivo, we have generated transgenic mice that express an activated form of this enzyme in thymocytes and peripheral T cells. We find that the transgene causes a block in early thymic development, resulting in a reduction in the steady-state number of CD4 and CD8 double positives, but not on the number of mature T cells. We also find that thymocytes and mature T cells expressing this transgene are more sensitive to signals through their TCR. In thymocytes this sensitivity difference is manifested as an increase in positive selection, although negative selection seems to remain unaffected. Therefore, these studies confirm and extend past reports that suggested a role for calcineurin in thymic development and selection.