The Signal Transducer and Activator of Transcription 5 (Stat5) plays a significant role in normal hematopoiesis and a variety of hematopoietic malignancies. Deficiency in Stat5 causes impaired cytokine-mediated proliferation and survival of progenitors and their differentiated descendants along major hematopoietic lineages such as erythroid, lymphoid, and myeloid cells. Overexpression and persistent activation of Stat5 are sufficient for neoplastic transformation and development of multi-lineage leukemia in a transplant model. Little is known, however, whether a continuous activation of this signal transducer is essential for the maintenance of hematopoietic malignancies. To address this issue, we developed transgenic mice that express a hyperactive mutant of Stat5 in hematopoietic progenitors and derived lineages in a ligand-controlled manner. In contrast to the transplant model, expression of mutant Stat5 did not adversely affect normal hematopoiesis in the presence of endogenous wildtype Stat5 alleles. However, the gain-of-function of this signal transducer in mice that carry Stat5a/b hypomorphic alleles resulted in abnormally high numbers of circulating granulocytes that caused severe airway obstruction. Downregulation of hyperactive Stat5 in diseased animals restored normal granulopoiesis, which also resulted in a swift clearance of granulocytes from the lung. Moreover, we demonstrate that Stat5 promotes the initiation and maintenance of severe granulophilia in a cell autonomous manner. The results of this study show that the gain-of-function of Stat5 causes excessive granulopoiesis and prolonged survival of granulocytes in circulation. Collectively, our findings underline the critical importance of Stat5 in maintaining a normal balance between myeloid and lymphoid cells during hematopoiesis, and we provide direct evidence for a function of Stat5 in granulophilia-associated pulmonary dysfunction.