Milk production remains suppressed in mammals during late pregnancy despite high levels of lactogenic polypeptide hormones. At parturition, associated with a precipitous fall in circulating progesterone, rising glucocorticoid levels synergize with prolactin to initiate copious milk production. This synergy is mediated at least in part through the coordinated activation of glucocorticoid receptors and transcription factor Stat5, particularly Stat5a. Here we show that two proline-juxtaposed serine residues within the transactivation domain of Stat5a are phosphorylated in the mammary gland during late gestation and lactation, and that these phosphorylation sites inhibit the transcriptional activity of Stat5a in the absence of glucocorticoid receptor costimulation. Specifically, transfection assays revealed that phosphorylation of residues S725 and S779 of Stat5a cooperatively suppressed prolactin-stimulated transcription from the beta-casein promoter in both COS-7 kidney and MCF-7 mammary cells. This suppression was associated with shortened duration and reduced amplitude of nuclear DNA binding activity of wild type Stat5a relative to that of the serine phosphorylation-defective Stat5 mutant. However, costimulation of glucocorticoid receptors completely reversed the suppressive effect of Stat5a serine phosphorylation on beta-casein gene transcription. We propose that serine phosphorylation within the transactivation domain may limit the activity of Stat5a in the absence of proper coactivation by glucocorticoid receptors.