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Tacrolimus, formerly known as FK506, is a macrolide antibiotic with immunosuppressive properties. Although structurally unrelated to cyclosporin A (CsA), its mode of action is similar. It exerts its effects principally through impairment of gene expression in target cells. Tacrolimus bonds to an immunophilin, FK506 binding protein (FKBP). This complex inhibits calcineurin phosphatase. The drug inhibits calcium-dependent events, such as interleukin-2 gene transcription, nitric oxide synthase activation, cell degranulation, and apoptosis. Tacrolimus also potentiates the actions of glucocorticoids and progesterone by binding to FKBPs contained within the hormone receptor complex, preventing degradation. The agent may enhance expression of the transforming growth factor beta-1 gene in a fashion analogous to that demonstrated for CsA. T cell proliferation in response to ligation of the T cell receptor is inhibited by tacrolimus. Type 1 T helper cells appear to be preferentially suppressed compared with type 2 T helper cells. T cell-mediated cytotoxicity is impaired. B cell growth and antibody production are affected indirectly by the suppression of T cell-derived growth factors necessary for these functions. Antigen presentation appears to be spared. The molecular events affected by tacrolimus continue to be discovered.