Tacrolimus ointment, formulated for the treatment of atopic dermatitis, is the first in a class of topical immunomodulators. Its mechanism of action is based on calcineurin inhibition, which results in suppression of antigen-specific T-cell activation and inhibition of inflammatory cytokine release. Animal and human studies have shown that topically applied tacrolimus is minimally absorbed into the systemic circulation, the fraction that is absorbed is extensively distributed, and tacrolimus does not accumulate in tissues following repeated topical application. In addition, tacrolimus ointment is not inherently irritating, sensitizing, phototoxic, or photoallergenic when applied to intact skin. Unlike some topical corticosteroids, tacrolimus ointment does not cause a decrease in collagen synthesis or skin thickness, nor does it produce skin abnormalities or depigmentation. In animal studies, repeated daily application of tacrolimus ointment up to 1 year is associated with dermal findings similar to those following vehicle application (mild to moderate dermal irritation and microscopic findings of acanthosis, hyperkeratosis, and superficial inflammation). In a 52-week study with Yucatan micropigs, no noteworthy macroscopic or microscopic changes (either dermal or systemic) related to the application of tacrolimus ointment (0.03% to 0.3% concentrations) were observed. Tacrolimus ointment was shown to be safe and effective in phase 2 and early phase 3 studies. Significant improvements in atopic dermatitis were observed in the majority of patients treated with tacrolimus ointment. The most common adverse events associated with its use were a transient burning sensation and pruritus at the site of application. Blood tacrolimus concentrations were below the limit of quantitation in most patients. (J Am Acad Dermatol 2001;44:S17-27.)