The biological activity of interleukin-2 receptors (IL-2R) is dependent on the functional coupling of IL-2R beta molecules to intracellular enzymes such as protein tyrosine kinase. The serine-rich, S-domain within the cytosolic portion of IL-2R beta plays an essential role in transduction of the IL-2 proliferative signal. Cells bearing either wild type IL-2R beta (Baf alpha/beta) or deletions within the S-domain (Baf alpha/beta SD1) were used to evaluate the importance of the S-domain in linking ligand binding to protein tyrosine kinase induction. Multiparameter, side by side comparisons showed that only those cells that expressed wild type IL-2R beta responded to IL-2 by increased cellular proliferation, accumulation of the c-myc proto-oncogene, and activation of protein tyrosine kinase. Activation of protein tyrosine kinase was, in turn, linked to increased tyrosine phosphorylation and activation of phosphatidylinositol-3-kinase. These findings indicate that the S-domain of the IL-2R beta chain is an essential component in the signal transduction cascade that links IL-2 binding to tyrosine kinase and phosphatidylinositol-3-kinase activation.