Persistent activation of Stat5 is frequently found in hematologic neoplasms. Studies conducted with constitutively active Stat5 mutants (Stat51*6 and cS5F) have shown that deregulated Stat5 activity promotes leukemogenesis. To investigate the oncogenic properties of these mutants, we used cS5F-expressing bone marrow cells which induce a multilineage leukemia when transplanted into recipient mice. Here, we show by immunocytochemistry that cS5F is localized mainly in the cytoplasmic compartment of leukemic cells, suggesting that the transforming nature of cS5F may be associated with a cytoplasmic function. In support of this hypothesis, we found that cS5F forms a complex with the p85 subunit of the phosphatidylinositol 3-kinase (PI3-K) and the scaffolding adapter Gab2 in leukemic bone marrow cells, resulting in the activation of Akt/PKB, a crucial downstream target of PI3-K. By using transducible TAT-Gab2 or TAT-Akt recombinant proteins, we were able to demonstrate that activation of the PI3-kinase/Akt pathway by cS5F molecules through Gab2 is essential for induction of cell growth. We also found that persistently phosphorylated Stat5 in primary cells from patients with myeloid leukemias has a cytoplasmic localization. These data suggest that oncogenic Stat5 proteins exert dual transforming capabilities not only as transcriptional activators but also as cytoplasmic signaling effectors.