Calcineurin is a heterodimeric Ca2+/calmodulin-dependent protein phosphatase that regulates signal transduction and is the target of immunophilin-immunosuppressive drug complexes in T-lymphocytes and in yeast. Calcineurin is composed of a catalytic A subunit and a regulatory B subunit that is myristoylated at its amino terminus. We employed genetic and biochemical approaches to investigate the functional roles of myristoylation of calcineurin B (CNB1) in Saccharomyces cerevisiae. A calcineurin B mutant in which glycine 2 was substituted by alanine (CNB1-G2A) did not incorporate [3H]myristate when expressed in yeast. Both wild-type calcineurin B and the CNB1-G2A mutant protein are partially associated with membranes and cytoskeletal structures; hence, myristoylation is not required for these associations. In several independent genetic assays of calcineurin functions (recovery from alpha-factor arrest, survival during cation stress, and viability of a calcineurin-dependent strain), the nonmyristoylated CNB1-G2A mutant protein exhibited full biological activity. In vitro, both wild-type and CNB1-G2A mutant proteins formed complexes with both cyclophilin A-cyclosporin A (CsA) and FKBP12-FK506 that contained calcineurin A. Interestingly, expression of the nonmyristoylated CNB1-G2A mutant protein rendered yeast cells partially resistant to the immunosuppressant CsA, but not to FK506. This study demonstrates that calcineurin B myristoylation is not required for function, but may participate in inhibition by the cyclophilin A-CsA complex.