The molecular components which mediate cytokine signaling from the cell membrane to the nucleus were studied. Upon the interaction of cytokines with their receptors, members of the janus kinase (Jak) family of cytoplasmic protein tyrosine kinases and of the signal transducers and activators of transcription (Stat) family of transcription factors are activated through tyrosine phosphorylation. It has been suggested that the Stat proteins are substrates of the Jak protein tyrosine kinases. MGF-Stat5 is a member of the Stat family which has been found to confer the prolactin response. MGF-Stat5 can be phosphorylated and activated in its DNA binding activity by Jak2. The activation of MGF-Stat5 is not restricted to prolactin. Erythropoietin (EPO) and growth hormone (GH) stimulate the DNA binding activity of MGF-Stat5 in COS cells transfected with vectors encoding EPO receptor and MGF-Stat5 or vectors encoding GH receptor and MGF-Stat5. The activation of DNA binding by prolactin, EPO and GH requires the phosphorylation of tyrosine residue 694 of MGF-Stat5. The transcriptional induction of a beta-casein promoter luciferase construct in transiently transfected COS cells is specific for the prolactin activation of MGF-Stat5; it is not observed in EPO- and GH-treated cells. In the UT7 human hematopoietic cell line, EPO and granulocyte-macrophage colony stimulating factor activate the DNA binding activity of a factor closely related to MGF-Stat5 with respect to its immunological reactivity, DNA binding specificity and molecular weight. These results suggest that MGF-Stat5 regulates physiological processes in mammary epithelial cells, as well as in hematopoietic cells.(ABSTRACT TRUNCATED AT 250 WORDS)