PRL regulates milk gene expression, at least in part, by activating JAK2 kinase and STAT5 (signal transducer and activator of transcription 5), initially termed mammary gland factor (MGF). These experiments were initiated to gain a better understanding of the mechanisms of transcriptional activation via PRL receptor (PRL-R) signaling. Binding of PRL to the recombinant pigeon PRL-R-activated transcription driven by a 2.8 kbp 5'-fragment of the rat beta-casein gene. PRL enhanced the expression of chimeric reporters containing the beta-casein PRL response element (PRE), but not the c-fos sis-inducible element, when the reporters were transfected into Chinese hamster ovary cells with the PRL-R. Wild type receptor, which contains a duplication of the entire extracellular ligand-binding domain, was only slightly more effective than a truncation mutant with a single extracellular domain. Transfection with either JAK1, JAK2, or JAK3 increased basal transcription through both the PRE and sis-inducible element. Coexpression of JAK2 with PRL-R resulted in amplification of the induction of the PRE by PRL, whereas JAKs 1 and 3 did not amplify the PRL effect. Overexpression of JAK2 mutants blocked PRE activation by PRL. Mutant JAK2 also interfered with PRE activation by JAK3 but did not affect JAK1's stimulatory effect.