The importance of cysteine residues on the function and regulation of calcineurin was investigated using chemical modification by sulfhydryl reagents. Calcineurin was stable toward incubation with several commonly employed reagents but not toward p-hydroxymercuribenzoic acid and N-ethylmaleimide, which partially inactivated the Ca2+-supported activity and rapidly abolished its activation by Ni2+. Ni2+ provided only slight protection from inactivation by N-ethylmaleimide which argued against labeling of the Ni2+ binding site(s). In contrast, protection was provided by Ca2+; this is probably due to allosteric effects, since Ca2+ binds to the B subunit while the A subunit contains all of the cysteine residues of calcineurin. These results suggest that activation of calcineurin by Ni2+ is synergistic with Ca2+ and indicates an important role for the Ca2+-binding subunit in the activation process. Labeling of calcineurin by [14C]N-ethylmaleimide was biphasic. An initial, rapid phase was without effect on the Ni2+ activity; inactivation correlated with a second, slower phase of modification. Differential labeling in the presence and absence of Ca2+ suggested that inactivation correlates with labeling of two residues. A kinetic analysis of the reaction order indicated that modification of only one of these groups may be responsible for inactivation; thus, 1 cysteine residue on the catalytic subunit appears to be important in establishing the Ni2+-activated conformation of calcineurin.