Overexpression of the mutationally activated Xmrk receptor initiates the formation of hereditary malignant melanoma in the fish Xiphophorus. In addition to transcriptional overexpression a cell-type specific signal transduction is essential for Xmrk mediated tumor formation. To elucidate the consequence of Xmrk signalling and to identify target proteins that characterize the tumor phenotype, we analysed proteins that are strongly tyrosine phosphorylated in the fish melanoma cell line PSM. One of the most prominent phosphotyrosine proteins was found to be the signal transducer and activator of transcription STAT5. In a heterologous cell system (murine pro B-cells), activation of the Xmrk kinase in a chimeric receptor induced tyrosine phosphorylation, nuclear translocation and DNA binding of STAT5. Following receptor stimulation, expression of the STAT5 specific target genes cis, osm and pim-1 was induced. In Xiphophorus PSM cells STAT5 was found to be preferentially localized in the nucleus, but treatment with tyrphostin AG555, a specific Xmrk kinase-inhibitor, blocked nuclear localization. In these cells as well as in Xiphophorus melanoma expression of pim-1 and constitutive DNA-binding activity of STAT5 was detectable. This constitutive activity was higher in malignant than in benign melanomas, indicating that STAT5 activation is correlated with the malignancy of these tumors.