Interleukin-4 (IL-4) is an immunomodulatory cytokine secreted by activated T lymphocytes, basophils, and mast cells. It plays an important role in modulating the balance of T helper (Th) cell subsets, favoring expansion of the Th2 lineage relative to Th1. Imbalance of these T lymphocyte subsets has been implicated in immunological diseases including allergy, inflammation, and autoimmune disease. IL-4 may mediate its biological effects, at least in part, by activating a tyrosine-phosphorylated DNA binding protein. This protein has now been purified and its encoding gene cloned. Examination of the primary amino acid sequence of this protein indicates that it is a member of the signal transducers and activators of transcription (Stat) family of DNA binding proteins, hereby designated IL-4 Stat. Study of the inhibitory activities of phosphotyrosine-containing peptides derived from the intracellular domain of the IL-4 receptor provided evidence for direct coupling of receptor and transcription factor during the IL-4 Stat activation cycle. Such observations indicate that IL-4 Stat has the same functional domain for both receptor coupling and dimerization.