Calcineurin is a calcium-dependent, serine/threonine phosphatase that functions as a signaling intermediate. In this study, we investigated the role of calcineurin in transforming growth factor-beta (TGF-beta)-mediated cellular effects and examined the signaling pathway involved in activation of calcineurin. Calcineurin is activated by TGF-beta in a time- and dose-dependent manner. Consistent with increased phosphatase activity, the calcineurin substrate, NFATc1, is dephosphorylated and transported to the nucleus. Inhibition of calcineurin prior to the addition of TGF-beta revealed that calcineurin is required for TGF-beta-mediated accumulation of extracellular matrix (ECM) proteins but not cell hypertrophy. Conversely, overexpression of constitutively active calcineurin was sufficient to induce ECM protein expression. The mechanism of calcineurin activation by TGF-beta was found to be induction of a low, sustained increase of intracellular calcium. Chelation of extracellular calcium blocked both TGF-beta-mediated calcium influx and calcineurin activity. Finally, calcium entry was found to be dependent upon generation of reactive oxygen species (ROS) including superoxide anion and hydrogen peroxide. Accordingly, inhibition of ROS generation also blocked TGF-beta-mediated calcineurin phosphatase activity and decreased ECM accumulation. In conclusion, this study describes a new pathway for TGF-beta-mediated regulation of ECM via generation of ROS, calcium influx, and activation of calcineurin.