Mental retardation is the most common phenotypic abnormality seen in Down's syndrome (DS) patients, yet the underlying mechanism remains mysterious. DS critical region 1 (DSCR1), located on chromosome 21, is overexpressed in the brain of DS fetus and encodes an inhibitor of calcineurin, but its physiological significance is unknown. To study its functional importance and role in mental retardation in DS, we generated Drosophila mutants of nebula, an ortholog of human DSCR1. Here, we report that both nebula loss-of-function and overexpression mutants exhibit severe learning defects that are attributed by biochemical perturbations rather than maldevelopment of the brain. These results, combined with our data showing that the same biochemical signaling pathway is altered in human DS fetal brain tissue overexpressing DSCR1, suggest that alteration of DSCR1 expression could contribute to mental retardation in DS.