Growth and stress are generally incompatible states. Stressed cells adapt to an insult by restraining growth, and conversely, growing cells keep stress responses at bay. This is evident in many physiological settings, including for example, the effect of stress on the immune or nervous system, but the underlying signaling mechanisms mediating such mutual antagonism are poorly understood. In eukaryotes, a central activator of cell growth is the protein kinase target of rapamycin (TOR) and its namesake signaling network. Calcineurin is a conserved, Ca(2+)/calmodulin-dependent protein phosphatase and target of the immunosuppressant FK506 (tacrolimus) that is activated in yeast during stress to promote cell survival. Here we show yeast mutants defective for TOR complex 2 (TORC2) or the essential homologous TORC2 effectors, SLM1 and SLM2, exhibited constitutive activation of calcineurin-dependent transcription and actin depolarization. Conversely, cells defective in calcineurin exhibited SLM1 hyperphosphorylation and enhanced interaction between TORC2 and SLM1. Furthermore, a mutant SLM1 protein (SLM1(DeltaC14)) lacking a sequence related to the consensus calcineurin docking site (PxIxIT) was insensitive to calcineurin, and SLM1(Delta)(C14) slm2 mutant cells were hypersensitive to oxidative stress. Thus, TORC2-SLM signaling negatively regulates calcineurin, and calcineurin negatively regulates TORC2-SLM. These findings provide a molecular basis for the mutual antagonism of growth and stress.