Cardiac alternans, described as periodic beat-to-beat alternations in contraction, action potential (AP) morphology or cytosolic Ca transient (CaT) amplitude, is a high risk indicator for cardiac arrhythmias and sudden cardiac death. We investigated mechanisms of cardiac alternans in single rabbit atrial myocytes. CaTs were monitored simultaneously with membrane currents or APs recorded with the patch clamp technique. Beat-to-beat alternations of AP morphology and CaT amplitude revealed a strong quantitative correlation. Application of voltage clamp protocols in the form of pre-recorded APs (AP-clamp) during pacing-induced CaT alternans revealed a Ca2+-dependent current consisting of a large outward component (4.78 ± 0.58 pA pF–1 in amplitude) coinciding with AP phases 1 and 2 that was followed by an inward current (−0.42 ± 0.03 pA pF–1; n = 21) during AP repolarization. Approximately 90% of the initial outward current was blocked by substitution of Cl− ions or application of the Cl− channel blocker DIDS identifying it as a Ca2+-activated Cl− current (ICaCC). The prominent AP prolongation at action potential duration at 30% repolarization level during the small alternans CaT was due to reduced ICaCC. Inhibition of Cl− currents abolished AP alternans, but failed to affect CaT alternans, indicating that disturbances in Ca2+ signalling were the primary event leading to alternans, and ICaCC played a decisive role in shaping the beat-to-beat alternations in AP morphology observed during alternans.