Cytokines induce the tyrosine phosphorylation and associated activation of signal transducers and activators of transcription (Stat). The mechanisms by which this response is terminated are largely unknown. Among a variety of inhibitors examined, the proteasome inhibitors MG132 and lactacystin affected Stat4, Stat5 and Stat6 turnover by significantly stabilizing the tyrosine-phosphorylated form. However, these proteasome inhibitors did not affect downregulation of the tyrosine-phosphorylated Stat1, Stat2 and Stat3. With Stat5 isoforms, we have observed that tyrosine-phosphorylated carboxyl-truncated forms of Stat5 proteins were considerably more stable than phosphorylated wild-type forms of the protein. Also, the C-terminal region of Stat5 could confer proteasome-dependent downregulation to Stat1. With a series of C-terminal deletion mutants, we have defined a relatively small, potentially amphipathic alpha-helical region that is required for the rapid turnover of the phosphorylated Stat5 proteins. The region is also required for transcriptional activation, suggesting that the functions are linked. The results are consistent with a model in which the transcriptional activation domain of activated Stat5 is required for its transcriptional activity and downregulation through a proteasome-dependent pathway.