Calcineurin is a Ca2+/calmodulin-regulated protein phosphatase that plays critical functional roles in T-cell activation and other Ca2+-mediated signal transduction pathways in mammalian cells. In Saccharomyces cerevisiae, calcineurin regulates the transcription of several genes involved in maintaining ion homeostasis (PMC1, PMR1, and PMR2) and cell wall synthesis (FKS2). In this paper, we report the identification and characterization of 11 single amino acid substitutions in the yeast calcineurin catalytic subunit Cna1p. We show that six substitutions (R177G, F211S, S232F, D258V, L259P, and A262P) affect the stability of calcineurin and that two substitutions (V385D and M400R) disrupt the interaction between Cna1p and the calcineurin regulatory subunit Cnb1p. We also identify three mutations (S373P, H375L, and L379S) that are clustered between the catalytic and the calcineurin B subunit-binding domains. These mutations do not significantly affect the ability of Cna1p to interact with Cnb1p, calmodulin, or Fkb1p (FK506-binding protein). However, these residue substitutions dramatically affect calcineurin activity both in vitro and in vivo. Thus, by using a random mutagenesis approach, we have shown for the first time that the linker region of the calcineurin catalytic subunit, as defined by the Ser373, His375, and Leu379 residues, is crucial for its function as a phosphatase.