Signal transducer and activator of transcription (Stat5) is a transcription factor, which transduces extracellular cytokine and growth-factor signals to the nuclei of mammalian cells. As a major mediator of prolactin action, it is involved in the regulation of the development, function, and survival of mammary epithelial cells. The carboxyl terminal of Stat5 encodes a transactivation domain (TAD), which interacts with coactivators and is crucial for the transcriptional induction of Stat5 target genes. To study the role of the Stat5 TAD in mediating Stat5 functions, a carboxy terminally truncated Stat5 variant (Stat5Delta750) was directed for expression in the mammary glands of transgenic mice by regulatory sequences of the beta-lactoglobulin (BLG) gene. Expression of Stat5Delta750 in mammary tissue reduced the rates of cell proliferation at mid and late pregnancy. Subsequently, morphological signs of milk secretion upon parturition were delayed. In double-transgenic mice, expression of Stat5Delta750 drastically decreased BLG/luciferase activity during lactation, but did not affect the expression and secretion of the endogenous beta-casein or alpha-lactalbumin into the milk. Expression of Stat5Delta750 also caused an increase in the number of apoptotic cells during mammary involution by a factor of 3 relative to control glands. Our data established a role for the Stat5 TAD in mediating the effects of Stat5 on mammary development, regulation of milk protein gene activity, and cell survival. The full effects of Stat5Delta750 may be partially buffered by the expression of endogenous wild-type Stat5 and the formation of truncated and wild-type heterodimers.