ABSTRACT: Calcineurin, the conserved Ca2+/calmodulin-regulated phosphatase and target of immunosuppressants, plays important roles in the circulatory, nervous, and immune systems. Calcineurin activity strictly depends on Ca2+ and Ca2+-bound calmodulin (Ca2+/CaM) to relieve autoinhibition of the catalytic subunit (CNA) by its C terminus. The C terminus contains two regulatory domains, the autoinhibitory domain (AID) and calmodulin-binding domain (CBD), which block the catalytic center and a conserved substrate-binding groove, respectively. However, this mechanism cannot apply to CNA?1, an atypical CNA isoform generated by alternative 3'-end processing, whose divergent C terminus shares the CBD common to all isoforms, but lacks the AID. We present the first biochemical characterization of CNA?1, which is ubiquitously expressed and conserved in vertebrates. We identify a distinct C-terminal autoinhibitory four-residue sequence in CNA?1, 462LAVP465, which competitively inhibits substrate dephosphorylation. In vitro and cell-based assays revealed that the CNA?1-containing holoenzyme, CN?1, is autoinhibited at a single site by either of two inhibitory regions, CBD and LAVP, which block substrate access to the substrate-binding groove. We found that the autoinhibitory segment (AIS), located within the CBD, is progressively removed by Ca2+ and Ca2+/CaM, whereas LAVP remains engaged. This regulatory strategy conferred higher basal and Ca2+-dependent activity to CN?1, decreasing its dependence on CaM, but also limited maximal enzyme activity through persistence of LAVP-mediated autoinhibiton during Ca2+/CaM stimulation. These regulatory properties may underlie observed differences between the biological activities of CN?1 and canonical CN?2. Our insights lay the groundwork for further studies of CN?1, whose physiological substrates are currently unknown.