ORAI1 constitutes the store-operated Ca2+ release-activated Ca2+ (CRAC) channel crucial for life. Whereas ORAI1 activation by Ca2+-sensing STIM proteins is known, still obscure is how ORAI1 is turned off through Ca2+-dependent inactivation (CDI), protecting against Ca2+ toxicity. Here we identify a spatially-restricted Ca2+/cAMP signaling crosstalk critical for mediating CDI. Binding of Ca2+-activated adenylyl cyclase 8 (AC8) to the N-terminus of ORAI1 positions AC8 near the mouth of ORAI1 for sensing Ca2+. Ca2+ permeating ORAI1 activates AC8 to generate cAMP and activate PKA. PKA, positioned by AKAP79 near ORAI1, phosphorylates serine-34 in ORAI1 pore extension to induce CDI whereas recruitment of the phosphatase calcineurin antagonizes the effect of PKA. Notably, CDI shapes ORAI1 cytosolic Ca2+ signature to determine the isoform and degree of NFAT activation. Thus, we uncover a mechanism of ORAI1 inactivation, and reveal a hitherto unappreciated role for inactivation in shaping cellular Ca2+ signals and NFAT activation.