Transcription factor involved in the transcriptional regulation of osmoprotective and inflammatory genes. Regulates hypertonicity-induced cellular accumulation of osmolytes. Homodimer when bound to DNA, completely encircles its DNA target. Does not bind with Fos and Jun transcription factors. Interacts with CIDEC; this interaction is direct and retains NFAT5 in the cytoplasm (By similarity). Nuclear distribution increases under hypertonic conditions. Detected in white and brown adipose tissue, muscle, heart, liver and kidney. Expressed in lymphocytes (at protein level). At 10.5 dpc, expressed in brain and developing lens. At 12.5 dpc, the expression is extended to liver. By 17.5 dpc, expressed abundantly in brain, spinal cord, heart end liver and moderately in salivary gland, lung, kidney, gut and bladder (at protein level). Up-regulated upon hypertonic conditions, this up-regulation in not observed in ES cells. Phosphorylated at Thr-135 by CDK5 in response to osmotic stress; this phosphorylation mediates its rapid nuclear localization. Embryonic and perinatal lethality with incomplete penetrance. At 17.5 dpc, 50% of the expected Mendelian rate with only 3.4% of the expected number living past 21 days after birth. The few survivors to adulthood fail to thrive and their weight is half compared to the wild-type. At 3 weeks old, kidney hypoplasia and an altered medullary morphology are observed with an increased apoptosis in the kidney inner medulla. Under osmotic stress, the transcriptional regulation of osmoprotective genes is altered in the kidney medulla. May have longer half-life and is more efficient in stimulation of transcription than isoform 3. The transcript encoding this isoform contains an alternative coding exon 4 which contains 2 stop codons and could target the transcript to nonsense-mediated mRNA decay after the pioneer round of translation, as suggested by decreased NFAT5 protein levels when the number of exon 4-containing transcripts increases. The insertion of exon 4 is stimulated in the presence of DDX5 and DDX17. Truncated N-terminus.