STAT (signal transducer and activator of transcription) proteins are critical regulators of cytokine-induced cell proliferation, differentiation and survival. STAT functional activity can be variably regulated by post-translational modifications, including phosphorylation, acetylation, methylation and sumoylation. Additionally, limited proteolytic digestion of full-length STAT proteins (STATalpha) generates C-terminally truncated forms (STATgamma) in different cell lineages, which have significantly reduced transcriptional activity due to the lack of the transactivation domain. Previously, it has been shown that STAT5gamma, generated by an unidentified nuclear serine protease, plays an important role in myeloid cell differentiation and is aberrantly expressed in acute myeloid leukaemia. To better understand this regulatory mechanism for STAT5 function, we have purified the STAT5 protease from the immature myeloid cell line 32D and identified it by MS analysis as the granule-derived serine protease, CatG (cathepsin G). We show that purified CatG can specifically cleave full-length STAT5 to generate STAT5gamma, and this activity can be inhibited by AEBSF [4-(2-aminoethyl)benzenesulfonyl fluoride] in an in vitro protease assay. Importantly, preparation of nuclear and cytoplasmic extracts from immature myeloid cell lines, 32D and FDC-P1, in the presence of a specific inhibitor for CatG results in the identification of STAT5alpha only. These studies indicate that nuclear STAT5gamma does not naturally exist in immature myeloid cells and is artificially generated from STAT5alpha during the preparation of extracts due to the abundance of CatG in these cells. Therefore in contrast with earlier studies, our data suggest that STAT5alpha, rather than STAT5gamma is the active form in immature myeloid cells.