The cytokines interleukin 7 (IL-7) and interleukin 4 (IL-4) regulate lymphoid differentiation and function and activate the transcription factor Stat5. Using mice deficient for the 2 highly related transcription factors, Stat5a and Stat5b (Stat5a/b(-/-)), we investigated the role of Stat5 for B-cell differentiation, expansion, and function. Peripheral blood B cells of Stat5-deficient mice are significantly reduced, but no proliferation defects in response to various mitogenic stimuli are found. Also, IgM and IgG1 antibody production and immunoglobulin class switching are not affected. Pre- and pro-B cells of Stat5-deficient animals were found to have reduced responses to IL-7. Pro- and pre-B cells are the target cells of the abl oncogene and numerous studies have suggested that Stat5a/b is essential for transformation by derivatives of the Abelson (abl) gene. To assess the role of Stat5a/b in transformation, we have evaluated the ability of various abl derivatives to transform cells from Stat5a/b-deficient mice in vitro or in vivo. We demonstrate that the absence of Stat5a/b is not essential for the induction of lymphoid or myeloid tumors in vivo or on the ability to transform bone marrow cells in vitro.