Genetic studies in mice have established a critical role for prolactin receptors and transcription factor Stat5 in mammary gland differentiation. However, the enzymatic coupling between prolactin receptors and Stat5 in this process has not been established. In addition to Jak2, several other tyrosine kinases reportedly also are associated with prolactin receptors and may phosphorylate Stat5. Because Jak2 null mice die in utero, we targeted Jak2 in an ex vivo model of prolactin-induced mammary epithelial cell differentiation to determine the role of Jak2 in regulation of cell differentiation and growth. Two independent targeting strategies were used to suppress Jak2 in immortalized HC11 mouse mammary epithelial cells: 1) stable expression of a specific Jak2 antisense construct and 2) adenoviral delivery of a dominant-negative Jak2 gene. We now demonstrate that Jak2 is essential for prolactin-induced differentiation and activation of Stat5 in normal mouse mammary epithelial cells. Furthermore, suppression of Jak2 in HC11 cells was associated with constitutive activation of oncoprotein Stat3 and a hyperproliferative phenotype characterized by increased mitotic rate, reduced apoptosis, and reduced contact inhibition. Collectively, our data suggest that Jak2 is differentiation-inducing and growth-inhibitory in normal mammary epithelial cells, observations that may shed new light on the role of the Jak2-Stat5 pathway in breast cancer.