Using chronic myelogenous leukemia (CML) as a model, we tested the hypothesis that cytokine-independent growth of leukemia cells results from aberrant activation of cytokine signaling pathways. The STAT5 (signal transducer and activator of transcription) protein, which is activated transiently in normal myeloid cells by cytokines such as GM-CSF (granulocyte-macrophage colony stimulating factor), was constitutively activated in cell lines derived from CML patients, even in the absence of GM-CSF. STAT5 was also activated in primary mouse bone marrow cells acutely transformed by the CML-specific BCR-ABL oncogene, but not by the serine kinase oncogene v-MOS. Reconstitution experiments in non-hematopoietic cells show that STAT5 activation by BCR-ABL occurs independent of cytokines. Results using BCR-ABL mutants which specifically uncouple connections to known signal transduction pathways show that STAT5 activation is kinase dependent and correlates directly with ability to confer cytokine independent growth in hematopoietic cells. BCR-ABL also activates JAK kinases, which may provide a mechanism for STAT activation. These findings are consistent with a role for STAT5 in hematopoietic transformation by BCR-ABL.