AbstractOrai1 is a ubiquitously‐expressed plasma membrane Ca2+ channel that is involved in store‐operated Ca2+ entry (SOCE): a fundamental biological process that regulates gene expression, the onset of inflammation, secretion, and the contraction of airway smooth muscle (ASM). During SOCE, Ca2+ leaves the endoplasmic reticulum, which then stimulates a second, amplifying wave of Ca2+ influx through Orai1 into the cytoplasm. Short Palate LUng and Nasal epithelial Clone 1 (SPLUNC1; gene name BPIFA1) is a multi‐functional, innate defense protein that is highly abundant in the lung. We have previously reported that SPLUNC1 was secreted from epithelia, where it bound to and inhibited Orai1, leading to reduced SOCE and ASM relaxation. However, the underlying mechanism of action is unknown. Here, we probed the SPLUNC1‐Orai1 interactions in ASM and HEK293T cells using biochemical and imaging techniques. We observed that SPLUNC1 caused a conformational change in Orai1, as measured using Forster resonance energy transfer (FRET). SPLUNC1 binding also led to Nedd4‐2 dependent ubiquitination of Orai1. Moreover, SPLUNC1 internalized Orai1 to lysosomes, leading to Orai1 degradation. Thus, we conclude that SPLUNC1 is an allosteric regulator of Orai1. Our data indicate that SPLUNC1‐mediated Orai1 inhibition could be utilized as a therapeutic strategy to reduce SOCE.