Erythroid colony formation in response to erythropoietin (EPO) stimulation is enhanced by costimulating the cells with prostaglandin-E2 (PGE2). The present study further analyzed the underlying mechanisms and demonstrated that EPO-mediated STAT5 transactivation in the erythroid AS-E2 cell line was enhanced 6-fold by PGE2 (10 microM), without affecting the STAT5 tyrosine phosphorylation or STAT5-DNA binding. Moreover, the PGE2-enhancing effect was independent of STAT5 serine phosphorylation. In AS-E2 cells STAT5 is constitutively phosphorylated on Ser780 (STAT5A) and EPO-dependently phosphorylated on Ser726/731 (STAT5A/STAT5B), but overexpression of STAT5 serine mutants did not affect STAT5 transactivation. In addition, PGE2 did not affect STAT5 serine phosphorylation. Instead, the stimulatory effect of PGE2 on STAT5 signaling could be mimicked by dibutyryl-cyclic adenosine monophosphate (cAMP) and the phosphodiesterase inhibitor IBMX, suggesting that the effect was mediated by cAMP. Activation of the cAMP pathway resulted in cAMP-response element binding protein (CREB) phosphorylation, which was sustained in the presence of EPO plus PGE2 and transient on EPO stimulation alone. The costimulatory effect of PGE2 on EPO-mediated STAT5 transactivation was inhibited by overexpression of serine-dead CREB or protein kinase A (PKA) inhibitor (PKI), in contrast to EPO-mediated transactivation, which was PKA independent. Furthermore, CREB-binding protein (CBP)/p300 was shown to be involved in EPO-mediated STAT5 transactivation, and a CBP mutant with increased affinity for CREB resulted in an additional enhancement of the PGE2 effect. Finally, we demonstrated that the STAT5 target genes Bcl-X, SOCS2, and SOCS3 were up-regulated by costimulation with PGE2. In summary, these studies demonstrate that PGE2 enhancement of EPO-induced STAT5 transactivation is mediated by the cAMP/PKA/CREB pathway.