The Janus kinase, JAK3 plays an important role in interleukin-2 (IL-2)-dependent signal transduction and proliferation of T lymphocytes. Our findings show that prostaglandin E2 (PGE2) can inhibit upregulation of JAK3 protein in naive T cells and can downregulate its expression in primed cells. Reduction in JAK3 was selective because expression of other tyrosine kinases (JAK1, p56(lck), and p59(fyn)) and signal transducer and activator of transcription (STAT)5, which are linked to IL-2 receptor (IL-2R) signaling pathway, were not affected. Inhibition of JAK3 may be controlled by intracellular cyclic adenosine monophosphate (cAMP) levels, as forskolin, a direct activator of adenylate cyclase and dibutyryl cAMP (dbcAMP), a membrane permeable analogue of cAMP suppressed JAK3 expression. Moreover, 3-isobutyl-1-methylxanthine (IBMX), an inhibitor of cAMP phosphodiesterase, potentiated PGE2-induced suppression of JAK3. In naive T cells, but not primed T cells, PGE2 and other cAMP elevating agents also caused a modest reduction in surface expression of the common gamma chain (gammac) that associates with JAK3. The absence of JAK3, but not IL-2R in T cells correlated with impaired IL-2-dependent signal transduction and proliferation. The alteration in IL-2 signaling included decreased tyrosine phosphorylation and DNA binding activity of STAT5 and poor induction of the c-Myc and c-Jun pathways. In contrast, IL-2-dependent induction of Bcl-2 was unaffected. These findings suggest that suppression of JAK3 levels may represent one mechanism by which PGE2 and other cAMP elevating agents can inhibit T-cell proliferation.