The signal transducer and activator of transcription (Stat) gene family comprises seven members with similarities in their domain structure and a common mode of activation. Members of this gene family mediate interferon induction of gene transcription and the response to a large number of growth factors and hormones. Extracellular ligand binding to transmembrane receptors causes the intracellular activation of associated tyrosine kinases, phosphorylation of Stat molecules, dimerization, and translocation to the nucleus. Prolactin-induced phosphorylation of Stat5 is a key event in the development and differentiation of mammary epithelial cells. In addition to the crucial phosphorylation at tyrosine 694, we have identified an O-linked N-acetylglucosamine (O-GlcNAc) as another secondary modification essential for the transcriptional induction by Stat5. This modification was only found on nuclear Stat5 after cytokine activation. Similar observations were made with Stat1, Stat3, and Stat6. Glycosylation of Stat5, however, does not seem to be a prerequisite for nuclear translocation. Mass spectrometric analysis revealed a glycosylated peptide in the N-terminal region of Stat5. Replacement of threonine 92 by an alanine residue (Stat5a-T92A) strongly reduced the prolactin induction of Stat5a glycosylation and abolished transactivation of a target gene promoter. Only the glycosylated form of Stat5 was able to bind the coactivator of transcription CBP, an essential interaction for Stat5-mediated gene transcription.