The PXIXIT calcineurin binding motif or highly related sequences are found in a variety of calcineurin-binding proteins in yeast, mammalian cells, and viruses. The accessory protein p12(I) encoded in the HTLV-1 pX ORF I promotes T cell activation during the early stages of HTLV-1 infection by activating nuclear factor of activated T cells (NFAT) through calcium release from the endoplasmic reticulum. We identified in p12(I), a conserved motif, which is highly homologous with the PXIXIT calcineurin-binding motif of NFAT. Both immunoprecipitation and calmodulin agarose bead pull-down assays indicated that wild type p12(I) and mutants of p12(I) that contained the motif-bound calcineurin. In addition, an alanine substitution p12(I) mutant (p12(I) AXAXAA) had greatly reduced binding affinity for calcineurin. We then tested whether p12(I) binding to calcineurin affected NFAT activity. p12(I) competed with NFAT for calcineurin binding in calmodulin bead pull-down experiments. Furthermore, the p12(I) AXAXAA mutant enhanced NFAT nuclear translocation compared with wild type p12(I) and increased NFAT transcriptional activity 2-fold greater than wild type p12(I). Similar to NFAT, endogenous calcineurin phosphatase activity was increased in Jurkat T cells expressing p12(I) independent of its calcineurin binding property. Thus, the reduced binding of p12(I) to calcineurin allows enhanced nuclear translocation and transcription mediated by NFAT. Herein, we are the first to identify a retroviral protein that binds calcineurin. Our data suggest that HTLV-1 p12(I) modulates NFAT activation to promote early virus infection of T lymphocytes, providing a novel mechanism for retrovirus-mediated cell activation.