The role of the transcription factor nuclear factor of activated T cells (NFAT) was initially identified in T and B cell gene expression, but its role in regulating gene expression in macrophages during sepsis is not known. Our data show that NFATc3 regulates expression of inducible nitric oxide synthase (iNOS) in macrophages stimulated with lipopolysaccharide. Selective inhibition of NFAT by cyclosporine A and a competitive peptide inhibitor 11R-VIVIT inhibited endotoxin-induced expression of iNOS and nitric oxide (NO) release. Macrophages from NFATc3 knockout (KO) mice show reduced iNOS expression and NO release and attenuated bactericidal activity. Gel shift and chromatin immunoprecipitation assays show that endotoxin challenge increases NFATc3 binding to the iNOS promoter, resulting in transcriptional activation of iNOS. The binding of NFATc3 to the iNOS promoter is abolished by NFAT inhibitors. NFATc3 KO mice subjected to sepsis show that NFATc3 is necessary for bacterial clearance in mouse lungs during sepsis. Our study demonstrates for the first time that NFATc3 is necessary for macrophage iNOS expression during sepsis, which is essential for containment of bacterial infections.