Cytokines and hormones activate a network of intracellular signaling pathways to regulate cell division, survival and differentiation. In parallel, a series of growth inhibitory mechanisms critically restrict cell population sizes. For example, mitogens can be opposed in crowded cell cultures through contact-inhibition or by autocrine release of antiproliferative substances. Here, we characterize a small, heat-stable growth inhibitor secreted by a rat T lymphoma line when cultured at high cell density. Short term incubation (<60 min) of prolactin-responsive Nb2 lymphoma cells at high density selectively blocked prolactin stimulation of p42/p44 mitogen-activated protein kinases and transcription factors Stat1 and Stat3 but not prolactin activation of Stat5 or the tyrosine kinase Jak2. The selective effects of cell density on prolactin signaling were reversible. Furthermore, exposure of cells at low density to conditioned media from cells incubated at high density had the same inhibitory effects on prolactin signaling. This selective inhibition of discrete prolactin signals was mimicked by short term preincubation of cells at low density with staurosporine or genistein but not with bis-indoleyl maleimide, cyclic nucleotide analogs, calcium ionophore A23187, or phorbol 12-myristate 13-acetate. A heat-stable, proteinase K-resistant, low molecular weight factor with these characteristics was recovered from high density culture medium. The partially purified inhibitor suppressed Nb2 cell growth with a sigmoidal concentration response consistent with a saturable, receptor-mediated process.