Milk protein gene expression in mammary epithelial cells is regulated by the action of the lactogenic hormones insulin, glucocorticoids and prolactin. The mammary gland factor, MGF, has been shown to be a central mediator in the lactogenic hormone response. The DNA binding activity of MGF is hormonally regulated and essential for beta-casein promoter activity. We have used Red A Sepharose- and sequence-specific DNA affinity chromatography to purify MGF from mammary gland tissue of lactating sheep. Proteins of 84 and 92 kDa were obtained, proteolytically digested and the resulting peptides separated by reverse phase high pressure liquid chromatography. The 84 and 92 kDa proteins yielded very similar peptide patterns. The amino acid sequence of two peptides was determined. The sequence information was used to derive oligonucleotide probes. A cDNA library from the mRNA of mammary gland tissue of lactating sheep was screened and a molecular clone encoding MGF was isolated. MGF consists of 734 amino acids and has sequence homology with the 113 (Stat113) and 91 kDa (Stat91) components of ISGF3, transcription factors which are signal transducers of IFN-alpha/beta and IFN-gamma. Two species of MGF mRNA of 6.5 and 4.5 kb were detected in mammary gland tissue of lactating sheep. Lower mRNA expression was found in ovary, thymus, spleen, kidney, lung, muscle and the adrenal gland. MGF cDNA was incorporated into a eukaryotic expression vector and cotransfected with a vector encoding the long form of the prolactin receptor into COS cells. A strong MGF-specific bandshift was obtained with nuclear extracts of COS cells induced with prolactin. Treatment of activated MGF with a tyrosine-specific protein phosphatase resulted in the loss of DNA binding activity. Prolactin-dependent transactivation of a beta-casein promoter-luciferase reporter gene construct was observed in transfected cells.