Following allogeneic hematopoietic cell transplantation, NK cells play important roles in hematopoietic cell engraftment, anti-viral responses, graft vs. host disease (GVHD) and graft vs. leukemia (GVL) reactions. Calcineurin inhibitors, such as cyclosporine A (CsA), are frequently administered to prevent or treat GVHD. It is generally considered that these immune suppressive agents inhibit GVL reactions. To date, little is known about the impact of these immune suppressants on NK cell function. To investigate this, NK cells were isolated from normal donors by negative selection and cultured with IL-2 (100 U/ml), IL-15 (10 ng/ml) and either physiological levels of CsA (1μg/ml) or vehicle control. Under these conditions, we consistently found that CsA treated cultures showed a reduction in NK cell expansion at one week (4.88 vs. 1.87 fold expansion, n=10). The phenotype of CsA treated NK cells was markedly different than controls. More specifically, after 7–10 days of culture with CsA there were significantly more CD56brightCD16− cells and significantly less CD56dimCD16+ cells compared to controls (p<0.001 for both). Accordingly, the percentage of KIR receptor (CD158a/h, CD158b/j and CD158e) expressing cells was significantly less in CsA treated cultures. No consistent changes were detected in the expression of NKG2D, NKp30, NKp44, or NKp46 on CsA treated NK cells relative to controls. To further investigate the influence of CsA on NK cell subset expansion, freshly isolated NK cells were stained with CFSE then cultured with CsA or vehicle control for 1 week. Using FACS we monitored CD56dimCD16+ and CD56brightCD16− cell division. There was no difference in the proliferation of CD56brightCD16− cells between the CsA and control treated cultures. In contrast, the CsA treated CD56dimCD16+ cells had fewer cell divisions, demonstrating that CsA selectively inhibits CD56dimCD16+ cell proliferation. These results were confirmed by determining the fold expansion of freshly isolated, FACS sorted CD56dimCD16+ and CD56brightCD16− populations cultured with CsA or vehicle control. To investigate the cytotoxicity of CsA treated NK cells, we performed killing assays using K562 and Raji cells as targets. Surprisingly, we consistently found higher cytotoxicity in CsA treated NK cells compared to controls (K562, p < 0.05 and Raji, p < 0.05). To further evaluate the functional activity of CsA treated NK cells, we investigated the intracellular IFN-γ secretion following IL-12/IL-18 stimulation. In 5 consecutive experiments the percentage of IFN-γ secreting cells was higher in CsA treated NK cells compared to vehicle controls (44% vs. 24%, p<0.05). Lastly, we determined the effect of CsA on NK cell differentiation from progenitor cells (CD34+Lin−CD38−) using an in vitro differentiation system. Briefly, progenitor cells were cultured on a murine feeder cell line (AFT-024) for 42 days in the presence of IL-3, IL-7, IL-15, SCF and FLT3L +/− CsA. We found that CsA treated cultures had less KIR expressing cells compared to controls. Collectively these results show that physiological levels of CsA inhibit CD56dimCD16+ cell growth and result in a population of NK cells that have less KIR receptor expression, higher cytotoxicity and more cytokine secretion. These findings may have important implications for both GVHD and GVL following hematopoietic cell transplantation.