Calcineurin, a calmodulin-stimulated phosphatase from bovine brain, was hydrolyzed by calpain I from human erythrocytes. In the absence of calmodulin, calpain rapidly transformed the 60-kilodalton (kDa) catalytic subunit of calcineurin into a transient 57-kDa fragment and thereafter a 43-kDa limit fragment. In the presence of calmodulin, the 60-kDa subunit was sequentially proteolyzed to a 55-kDa fragment and then a 49-kDa fragment. Upon proteolysis in the absence or presence of calmodulin, the p-nitrophenyl phosphatase activity (assayed in the presence of calmodulin) was increased by 300%. The 43- and the 49-kDa fragments were found to (i) remain associated with the small subunit (17 kDa), (ii) have lost the ability to bind and to be activated by calmodulin, and (iii) have phosphatase activity that was still stimulated by Mn2+ or Ni2+. The 43- + 17-kDa form had similar Km values for various substrates, but the Vmax values were increased compared with the native enzyme. It is proposed that (i) a 43-kDa core segment of the 60-kDa subunit of calcineurin contained the catalytic domain, the small subunit-binding domain, and the metal ion (Mn2+ and (or) Ni2+) binding site; and (ii) two distinct types of inhibitory domains exist near the end(s) of the large subunit, one of which is calmodulin regulated, while the other is calmodulin independent.