Tacrolimus ointment, a topical inhibitor of the phosphatase calcineurin, has recently been approved in the United States for use in the treatment of atopic dermatitis. It is the first topical immune suppressant that is not one of the hydrocortisone derivatives, important allies in dermatology for nearly 50 years. Although tacrolimus is less able to penetrate thick skin than glucocorticoids, it does not cause dermal atrophy, an important advantage over the hydrocortisone class. Pimecrolimus (ASM 981), a newer calcineurin inhibitor closely related to tacrolimus, is also being developed for atopic dermatitis therapy. Pimecrolimus has an altered skin penetration profile but the same mechanism of action as tacrolimus. In this review we chronicle the discovery of the calcineurin inhibitors, their presumed evolutionary role as a bacterial "smart bomb" against fungi, molecular and cellular mechanisms of action in the immune system, systemic and topical side effects, efficacy in atopic dermatitis, and future applications within the specialty of dermatology. Particular attention is given to the issues of systemic absorption of tacrolimus, the conditions in which absorption can become a concern, efficacy relative to glucocorticoids, and the choice of 0.03% or 0.1% tacrolimus ointment for use in adults and children.