We previously reported that the in vivo and in vitro suppression of Nuclear Factor of Activated T Cells (NFAT) signaling increases osteoblast differentiation and bone formation. To investigate the mechanism by which NFATc1 regulates osteoblast differentiation, we established an osteoblast cell line that overexpresses a constitutively active NFATc1 (ca-NFATc1). The activation of NFATc1 significantly inhibits osteoblast differentiation and function, demonstrated by inhibition of alkaline phosphatase activity and mineralization as well as a decrease in gene expression of early and late markers of osteoblast differentiation such as osterix and osteocalcin, respectively. By focusing on the specific role of NFATc1 during late differentiation, we discovered that the inhibition of osteocalcin gene expression by NFATc1 was associated with a repression of the osteocalcin promoter activity, and a decrease in TCF/LEF transactivation. Also, overexpression of NFATc1 completely blocked the decrease in total histone deacetylase (HDAC) activity during osteoblast differentiation and prevented the hyperacetylation of histones H3 and H4. Mechanistically, we show by Chromatin Immunoprecipitation (ChIP) assay that the overexpression of NFATc1 sustains the binding of HDAC3 on the proximal region of the osteocalcin promoter, resulting in complete hypoacetylation of histones H3 and H4 when compared to GFP-expressing osteoblasts. In contrast, the inhibition of NFATc1 nuclear translocation either by cyclosporin or by using primary mouse osteoblasts with deleted calcineurin b1 prevents HDAC3 from associating with the proximal regulatory site of the osteocalcin promoter. These preliminary results suggest that NFATc1 acts as a transcriptional co-repressor of osteocalcin promoter, possibly in an HDAC-dependent manner. © 2009 Elsevier Inc. All rights reserved.