Changes in intracellular calcium are involved in phototransduction processes in both vertebrate and invertebrate photoreceptors. During this phototransduction process in the Limulus ventral eye, there is a biochemical change in the protein phosphatase, calcineurin, such that it becomes capable of activation by calcium and calmodulin. Here we show that the calcium/calmodulin-dependent calcineurin-like activity in light-adapted ventral eye was completely inhibited by the CaN autoinhibitory peptide, CaN A457–482 and the Merck analog of the membrane-permeable, immunosuppressant drug, FK 506, L-683, 590, but not an inactive analogue, L-685, 818. Whole-cell, voltage-clamp recordings of spontaneous quantal bump activity present in dark-adapted photoreceptors injected with either CaN A457–482 (500 μM) or superfused with L-683, 590 (20 μM) or L-685, 818 revealed that both CaN A457–482 and L-683, 590, but not L-685, 818, caused rapid decreases in quantal bump amplitude, rise time and fall time, resulting in smaller, sharper bumps. This was correlated with enhanced phosphorylation of arrestin in light-adapted ventral eye photoreceptors exposed to L-683, 590 or less reliably okadaic acid. Both CaN A457–482 and L-683, 590 markedly affected the light-stimulated inward currents recorded from light-adapted ventral photoreceptors, causing a “terracing” of the inward current, and an intensity-dependent delay in the time required to reach peak amplitude. Consequently, inhibition of calcineurin markedly affects two major rhodopsin-dependent electrophysiological processes, and implicates CaN as an integral component in the phototransduction cascade.