STAT (signal transducers and activators of transcription) proteins are transcription factors which are activated by phosphorylation on tyrosine residues upon stimulation by cytokines. Seven members of the STAT family are known, including the closely related STAT5A and STAT5B, which are activated by various cytokines. Except for prolactin-dependent beta-casein production in mammary gland cells, the biological consequences of STAT5 activation in various systems are not clear. We applied PCR-driven random mutagenesis and a retrovirus-mediated expression screening system to identify constitutively active forms of STAT5. By this strategy, we have identified a constitutively active STAT5 mutant which has two amino acid substitutions; one is located upstream of the putative DNA binding domain (H299R), and the other is located in the transactivation domain (S711F). The mutant STAT5 was constitutively phosphorylated on tyrosine residues, localized in the nucleus, and was transcriptionally active. Expression of the mutant STAT5 partially dispenses with interleukin 3 (IL-3) as a growth stimulant of IL-3-dependent cell lines. Further analyses of the mutant STAT5 have demonstrated that both of the mutations are required for nuclear localization, efficient transcriptional activation, and induction of IL-3-independent growth of an IL-3-dependent cell line, Ba/F3, and have indicated that a molecular basis for the constitutive activation is the stability of the phosphorylated form of the mutant STAT5.