The calmodulin-dependent phosphatase calcineurin is an important molecular target of the immunosuppressive drugs cyclosporin A (CsA) and FK506. Complexes of CsA and FK506 with their immunophilin ligands interact with calcineurin in vitro, resulting in the inhibition of its serine/threonine phosphatase activity toward polypeptide substrates. In order to demonstrate that CsA and FK506 inhibit calcineurin in vivo, we developed an assay to measure calcineurin phosphatase activity in crude cell extracts. We have previously reported that incubation of intact cells with nanomolar concentrations of either CsA or FK506 results in potent inhibition of calcineurin activity in a variety of cell lines. Here we discuss in detail the methodology and applications of the cell extract calcineurin assay.