Chronic myelogenous leukemia (CML) is a myeloproliferative disease characterized by the BCR-ABL genetic translocation and constitutive activation of the Abl tyrosine kinase. Among members of the Signal Transducers and Activators of Transcription (STAT) family of transcription factors, Stat5 is activated by the Bcr-Abl kinase and is implicated in the pathogenesis of CML. We recently identified PD180970 as a new and highly potent inhibitor of Bcr-Abl kinase. In this study, we show that blocking Bcr-Abl kinase activity using PD180970 in the human K562 CML cell line resulted in inhibition of Stat5 DNA-binding activity with an IC(50) of 5 nM. Furthermore, abrogation of Abl kinase-mediated Stat5 activation suppressed cell proliferation and induced apoptosis in K562 cells, but not in the Bcr-Abl-negative myeloid cell lines, HEL 92.1.7 and HL-60. Dominant-negative Stat5 protein expressed from a vaccinia virus vector also induced apoptosis of K562 cells, consistent with earlier studies that demonstrated an essential role of Stat5 signaling in growth and survival of CML cells. RNA and protein analyses revealed several candidate target genes of Stat5, including Bcl-x, Mcl-1, c-Myc and cyclin D2, which were down-regulated after treatment with PD180970. In addition, PD180970 inhibited Stat5 DNA-binding activity in cultured primary leukemic cells derived from CML patients. To detect activated Stat5 in CML patient specimens, we developed an immunocytochemical assay that can be used as a molecular end-point assay to monitor inhibition of Bcr-Abl signaling. Moreover, PD180970 blocked Stat5 signaling and induced apoptosis of STI-571 (Gleevec, Imatinib)-resistant Bcr-Abl-positive cells. Together, these results suggest that the mechanism of action of PD180970 involves inhibition of Bcr-Abl-mediated Stat5 signaling and provide further evidence that compounds in this structural class may represent potential therapeutic agents for CML.