Signal transducer and activator of transcription 5 (Stat5) transduces extracellular cytokine and growth factor signals to the nucleus of mammary epithelial cells and thereby regulates gene transcription during pregnancy, lactation, and weaning. Gene constructs were prepared which subject the wild-type Stat5 or a constitutively active variant of Stat5 to the control of the beta-lactoglobulin (BLG) regulatory sequences and direct it to the mammary epithelium. The integrity and functionality of these constructs were confirmed through introduction into cultured mammary epithelial cells and hormone induction experiments. Expression levels and states of activity of Stat5 in mammary gland tissue were manipulated by introducing Stat5 variants as transgenes into the pronuclei of transgenic mice. The consequences of enhanced Stat5 expression and activation on the development of alveoli, their differentiated functions, and on postlactational involution were investigated. As expected, the transgenic mouse lines expressed the wild-type Stat5 construct (BLG/STAT5) and the constitutively active Stat5 variant (BLG/STAT5ca) exclusively in mammary epithelial cells during pregnancy and lactation. BLG/STAT5 mice exhibited larger alveoli at mid-pregnancy and a delayed onset of involution. Condensed alveoli, a high degree of cellular proliferation, and delayed involution were associated with STAT5ca expression. Elevated levels of beta-casein gene expression were found in BLG/STAT5 and STAT5ca transgenic mice during late pregnancy and lactation, indicating a limiting role for Stat5 under normal physiological conditions. This was accompanied by higher levels of beta-casein secretion into the milk and enhanced growth of pups. Transgenic animals expressing the BLG/STAT5ca transgene were predisposed to tumor formation in the mammary gland. This study extends the functional observations made in cultured mammary epithelial cells and in gene knockout mice. It identifies Stat5 as a multifunctional regulator of mammary cell proliferation, milk protein gene expression, and postlactational apoptosis.