Cytokines are of great importance in the growth and differentiation of hematopoietic and other cells. Moreover, they are also crucial in immunoregulation and in host defense. Although our understanding of the molecular basis of cytokine action is far from complete, recent advances have substantially improved our knowledge of cytokine-dependent signal transduction. The delineation of the structure of cytokine receptors and the signaling pathways they utilize has provided clues as to how the strikingly specific effects of cytokines are achieved. Additionally, the basis of some of the pleiotropic and redundant effects of cytokines has also become clear. The discovery of the Janus family of protein tyrosine kinases (Jaks) and the STATs (signal transducers and activators of transcription) has also provided key insights into the mechanism by which intracellular signals are transduced. The following paradigm has emerged: cytokines induce dimerization of receptor subunits that are constitutively associated with Jaks. This activates the Jaks, which then phosphorylate the receptors. The phosphorylated receptors are bound by SH2-containing proteins, one class of which is the STATs. Activated STATs, then, translocate to the nucleus to effect gene transcription. Though the Jaks do not explain much in terms of specificity in signaling, the function of the STATs does. The discovery of patients with autosomal recessive severe combined immunodeficiency due to mutations of a particular Jak, Jak3, and the phenotype of knockout mice lacking Jak3 and various STATs demonstrate the specific and critical roles of these molecules in the development and function of the immune system.