Interleukin-2 (IL-2) activates the receptor-associated Janus family tyrosine kinases, Jak1 and Jak3, which in turn phosphorylate and activate specific STAT proteins (signal transducers and activators of transcription), such as STAT5. Activation of Jak and STAT proteins by IL-2 is transient and the mechanism for the subsequent down-regulation of their activity is largely unknown. We report here that IL-2-induced DNA-binding activity and tyrosine phosphorylation of STAT5 are stabilized by a proteasome inhibitor MG132; however, no detectable ubiquitination of the STAT proteins is observed. This sustained STAT5 activation can be blocked by protein kinase inhibitors, which is consistent with the ability of the proteasome inhibitor to stabilize IL-2-induced tyrosine phosphorylation of Jak1 and Jak3. These results suggest that proteasome-mediated protein degradation modulates protein-tyrosine phosphatase activity that negatively regulates the Jak-STAT signaling pathways.