We have previously reported that nuclear factor of activated T cells (NFATs) play an important role in the regulation of vascular smooth muscle cell migration and proliferation by receptor tyrosine kinase and G protein-coupled receptor agonists, platelet-derived growth factor-BB and thrombin, respectively. To understand the role of NFATs in vascular disease, we have now studied the involvement of these transcription factors in neointima formation in a rat carotid artery balloon injury model. The levels of NFATc1 in injured right common carotid arteries were increased at 72 h, 1 week, and 2 weeks after balloon injury compared with its levels in uninjured left common carotid arteries. Intraperitoneal injection of cyclosporine A (CsA), a pharmacological inhibitor of the calcineurin-NFAT activation pathway, suppressed balloon injury-induced neointima formation by 40%. Similarly, adenoviral-mediated expression of GFPVIVIT, a competent peptide inhibitor of the calcineurin-NFAT activation pathway, in injured arteries also reduced neointima formation by about 40%. Furthermore, CsA and GFPVIVIT attenuated balloon injury-induced neointimal smooth muscle cell proliferation as determined by bromodeoxyuridine staining. Platelet-derived growth factor-BB induced the expression of COX-2 in cultured VSMC in a time- and NFAT-dependent manner. COX-2 expression was also increased in the right common carotid artery in a time-dependent manner after balloon injury as compared with its levels in uninjured left common carotid artery and both CsA and GFPVIVIT negated this response. Together these results for the first time demonstrate that NFATs play a critical role in neointima formation via induction of expression of COX-2.