Signal transduction pathways enable extracellular signals to activate latent transcription factors in the cytoplasm of cells. Dimerization, nuclear localization and binding to specific DNA sequences result in the induction of gene transcription by these proteins. These events are necessary for the functioning of the JAK/STAT pathway and of the glucocorticoid-receptor pathway. In the former, the protein Stat5, which is a member of a family of signal transducers and activators of transcription, is activated by cytokines, hormones and growth factors. These polypeptide ligands bind at the outside of the cell to specific transmembrane receptors and activate intracellular Janus protein tyrosine kinases (JAKs) to tyrosine-phosphorylate STAT proteins; interaction with the SH2 domain of the dimerization partner then confers the ability to bind to DNA at the STAT-response element and induce transcription. In the glucocorticoid-receptor pathway, the receptor interacts with its steroid hormone ligand in the cytoplasm, undergoes an allosteric change that enables the hormone receptor complex to bind to specific DNA-response elements (glucocorticoid response elements, or GRE) and modulate transcription. Although these pathways appear to be unrelated, we show here that the glucocorticoid receptor can act as a transcriptional co-activator for Stat5 and enhance Stat5-dependent transcription. Stat5 forms a complex with the glucocorticoid receptor which binds to DNA independently of the GRE. This complex formation between Stat5 and the glucocorticoid receptor diminishes the glucocorticoid response of a GRE-containing promoter.