Previously, we reported that whereas both signal transducers and activators of transcription (STAT) 5A and STAT5B can be activated with respect to tyrosine phosphorylation and DNA binding potential by Src kinase, only STAT5B was translocated to the nucleus, where it presumably activates unique downstream responses. To help elucidate the functional consequences of STAT5B activation by v-src, the properties of stably transfected NIH-3T3 cells containing both an intact and a dominant negative, COOH-terminal-truncated isoform of STAT5B were investigated. STAT5B enhanced the transforming potential of v-Src as reflected by both an increase in focus formation and growth in soft agar. STAT5B also enhanced v-Src-induced cell cycle progression and cell motility in NIH-3T3 cells. Furthermore, the dominant negative, COOH-terminal-truncated isoform of STAT5B was able to partially suppress v-Src-mediated cell transformation. These results support the hypothesis that STAT5B may enhance Src/Abl-induced tumorigenesis. Accordingly, the equilibrium between STAT5B and STAT5A and their naturally occurring truncated forms may therefore play a key role in the etiology of certain cancers.