NFAT transcription factors play critical roles in gene transcription during immune responses. To investigate further the two most prominent NFAT family members, NFATc1 and NFATc2, we generated mice bearing lymphoid systems devoid of both. Doubly deficient T cells displayed cell surface markers of activation yet were significantly deficient in the development of multiple effector functions, including Th cytokine production, surface effector molecule expression, and cytolytic activity. Nevertheless, doubly deficient B cells were hyperactivated, as evidenced by extremely elevated serum IgG1 and IgE, as well as plasma cell expansion and infiltration of end organs. Thus, in T cells, NFATc1 and NFATc2 are dispensable for inflammatory reactivity but are required for effector differentiation, while in B cells, NFATs regulate both normal homeostasis and differentiation.