Nuclear factor of activated T cells (NFAT) is a critical regulator of early gene transcription in response to TCR-mediated signals. Here, we show that mice lacking both NFATp and NFAT4 develop a profound lymphoproliferative disorder likely due to a lowered threshold for TCR signaling coupled with increased resistance to apoptosis secondary to defective FasL expression. NFAT mutant mice also have allergic blepharitis, interstitial pneumonitis, and a 10³ to 10⁴ fold increase in serum IgG1 and IgE levels, secondary to a dramatic and selective increase in Th2 cytokines. This phenotype may be ascribed to unopposed occupancy of the IL-4 promoter by NFATc. Our data demonstrate that lymphoid homeostasis and Th2 activation require a critical balance among NFAT family members.