Calcineurin, a conserved Ca(2+)/calmodulin-regulated protein phosphatase, is an important mediator of calcium-dependent signal transduction pathways in many organisms. In Saccharomyces cerevisiae, calcineurin positively regulates transcription in response to stress by dephosphorylating the transcription factor Crz1p. Here we describe the identification, cloning, and function of the gene encoding the Magnaporthe grisea CRZ1 homolog, MgCRZ1. Specifically, we demonstrated that MgCRZ1 partially complemented a yeast Deltacrz1 mutant and exhibited Ca(2+) and calcineurin activity-dependent cellular localization. Targeted disruption of MgCRZ1 resulted in hypersensitivity to Ca(2+). Compared with the wild-type Guy11 strain, the Deltacrz1 mutants formed significantly reduced numbers of conidia and a large portion of abnormal appressoria (>50%) that exhibited little or no melanin production. Lipid metabolism was delayed, and the level of turgor pressure within the appressoria declined, thereby notably attenuating mutant pathogenicity. We conclude that MgCRZ1 is essential for growth, development, and full virulence of M. grisea.