Protein phosphatase-2B was purified from extracts of rabbit skeletal muscle by a procedure that involved fractionation with ammonium sulphate, chromatography on DEAE-Sepharose, fractionation with poly(ethylene glycol), gel filtration on Sephadex G-200 (Mr = 98000 +/- 4000), chromatography on Affi-Gel Blue and affinity chromatography on calmodulin-Sepharose. The enzyme was purified 3500-fold in seven days with an overall yield of 0.5%. The alpha-subunit of phosphorylase kinase, protein phosphatase inhibitor-1 and the myosin P-light chain from rabbit skeletal muscle were dephosphorylated by protein phosphatase-2B with similar kinetic constants. The alpha-subunit of phosphorylase kinase was dephosphorylated at least 100-fold more rapidly than the beta-subunit, while glycogen phosphorylase, glycogen synthase, histones H1 and H2B, ATP-citrate lyase, acetyl-CoA carboxylase, L-pyruvate kinase and protein synthesis initiation factor eIF-2 were not dephosphorylated at significant rates. Protein phosphatase-2B became activated 10-fold by calmodulin (A0.5 = 6 nM) after chromatography on DEAE-Sepharose and this degree of activation was maintained throughout the remainder of the purification. Calmodulin increased the Vmax of the reaction without altering the Km for inhibitor-1. The activity of protein phosphatase-2B was completely dependent on Ca2+ in the presence or absence of calmodulin. Half-maximal activation was observed at 1.0 microM Ca2+ in the absence, and at 0.5 microM Ca2+ in the presence, of 0.03 microM calmodulin. Protein phosphatase-2B was inhibited completely by trifluoperazine; half-maximal inhibition occurred at 45 microM in the absence and 35 microM in the presence of 0.03 microM calmodulin. The metabolic role of protein phosphatase-2B in vivo is discussed in the light of the observation that this enzyme is probably identical to a major calmodulin-binding protein of neural tissue termed calcineurin or CaM-BP80 [Stewart, A. A., Ingebritsen, T. S., Manalan, A., Klee, C. B., and Cohen, P. (1982) FEBS Lett. 137, 80-84].