Although prolactin and interleukin 2 (IL-2) can elicit distinct physiological responses, we have found that their signal pathways share a common signal transducer and activator of transcription, STAT5. STAT5 was originally identified as a mammary gland factor induced by prolactin in lactating breast cells. Here we demonstrate that STAT5 is activated after IL-2 stimulation of two responsive lymphocyte cell lines, Nb2 and YT. Activation of STAT5 is measured both by IL-2-induced tyrosine phosphorylation and by IL-2-induced DNA binding. The STAT5 DNA recognition site is the same as the interferon gamma-activated site (GAS) in the interferon regulatory factor 1 gene. We demonstrate that the GAS element is necessary and sufficient for transcriptional induction by both IL-2 and prolactin in T lymphocytes. These results indicate that the role of STAT5 in the regulation of gene expression is not restricted to mammary cells or to prolactin, but is an integral part of the signal pathway of a critical immunomodulatory cytokine, IL-2.