Calcineurin (PP2B) has recently been shown to be upregulated in the medullary thick ascending limb (mTAL) during diabetes. The mTAL expresses all three isoforms of NO synthase, which are subject to phosphoregulation and represent substrates for PP2B. Therefore, we hypothesized that diabetes induces PP2B-dependent up-regulation of NOS activity and NO production in the mTAL. Three weeks after injection of streptozotocin (STZ rats) or vehicle (sham rats), mTAL suspensions were prepared for use in functional and biochemical assays. PP2B activity and expression were increased in mTALs from STZ rats compared to sham. Nitrite production was significantly reduced in mTALs from STZ rats compared to sham. However, incubation with the free radical scavenger, tempol, unmasked a significant increase in nitrite production from mTALs under diabetic conditions. Inhibition of PP2B attenuated the increase in nitrite production and NOS activity in mTALs from STZ rats. Analysis of specific NOS isoform activity revealed increased NOS1 and NOS2 activities in mTALs from STZ rats. All three NOS isoform activities were regulated in a PP2B-dependent manner. Western blot analysis detected no differences in NOS isoform expression, although phosphorylation of pThr⁴⁹⁵-NOS3 was significantly reduced in mTALs from STZ rats. Phosphorylation of pSer⁸⁵²-NOS1, pSer⁶³³-NOS3, pSer¹¹⁷⁷-NOS3 were similar in mTALs from STZ and sham rats. Inhibition of PP2B did not alter the phosphorylation of NOS1 or NOS3 at known sites. In conclusion, while NO bioavailability in mTALs is reduced during diabetes, free radical scavenging with tempol unmasks an increase in NO production involving PP2B-dependent activation of NOS1 and NOS2.