A broad spectrum of cytokines can activate the signal transducer and activator of transcription 5 (Stat5) by inducing a single tyrosine phosphorylation of the molecule. Although the process of Stat5 activation has been well studied, the mechanism by which it is inactivated is not fully understood. We demonstrate that the proteasome inhibitor MG132, but not the nuclear export inhibitor leptomycin B (LMB), stabilizes active nuclear Stat5A, whereas MG132 only partially stabilizes active cytoplasmic Stat5A. Importantly, ubiquitinated Stat5A is detected in the nucleus and the polyubiquitination of active Stat5A is K48 linked, a linkage type targeting proteins for degradation. Ubiquitination of Stat5A is recapitulated in a cell-free system, and Ubc5 is identified as the E2-conjugating enzyme for Stat5A ubiquitination. Interestingly, phosphorylation of Stat5A per se is not required for ubiquitination. Finally, C-terminal deletion analysis of Stat5A localizes the amphipathic region of amino acids 751-762 as a ubiquitination signal, possibly representing an E3 recognition motif. Taken together, these results demonstrate that the down-regulation of nuclear and cytoplasmic active Stat5A is differentially regulated. In the nucleus, ubiquitin/proteasome-mediated protein degradation is the dominant mechanism for the down-regulation of active Stat5A, whereas in the cytoplasm, protein tyrosine phasphatase is a major player in the down-regulation of active Stat5A.