At central excitatory synapses, the transient elevation of intracellular calcium reduces N-methyl-D-aspartate (NMDA) receptor activity. Such 'calcium-dependent inactivation' is mediated by interactions of calcium/calmodulin and alpha-actinin with the C terminus of NMDA receptor 1 (NR1) subunit. However, inactivation is also NR2-subunit specific, because it occurs in NR2A- but not NR2C-containing receptors. We examined the molecular basis for NR2-subunit specificity using chimeric and mutated NMDA receptor subunits expressed in HEK293 cells. We report that the intracellular loop immediately distal to the pore-forming P-loop M2 (M2-3 loop), as well as a short region in the C terminus, are involved in NR2-subunit specificity. Within the M2-3 loop, substitution of residue 619 in NR2A (valine) for the corresponding NR2C residue (isoleucine) reduced inactivation without affecting calcium permeability of the channel. In contrast, a Q620E mutation in NR2A reduced the relative calcium permeability without altering inactivation. Mutation of three serine/threonine residues in the M2-3 loop also reduced inactivation, as did substitution of the intracellular C terminus of NR2A for NR2C. We speculate that the M2-3 loop of NR2 modulates calcium-dependent inactivation by interacting with the NR1 C terminus, a region known to be essential for inactivation.