CD4 T helper 2 (Th2) cells have critical functions in immune responses against extracellular parasites and are involved in asthma and other allergic diseases. The differentiation of naïve CD4 T cells into Th2 cells is initiated from T-cell receptor and cytokine-mediated signaling followed by upregulation of GATA3 and activation of signal transducer and activator of transcription 5 (STAT5), two indispensable events for this differentiation process. In this review, regulation of GATA3 expression and STAT5 activation and functions of these two transcription factors in inducing the expression of Th2 cytokines, cytokine receptors as well as epigenetic modification at Th2 cytokine locus are summarized. Furthermore, I present positive and negative regulatory networks important for Th2 cell commitment, selective growth of committed Th2 cells and suppression of alternative lineage fates. Finally, the difference between in vitro and in vivo Th2 differentiation is discussed.