PRL promotes cell growth and differentiation in the mammary gland, which has implications for breast cancer as well as normal development. Our data demonstrate that PRL significantly increases proliferation of mammary carcinoma cells. PRL also increases cyclin D1 levels 2-fold, which can be inhibited by actinomycin D, suggesting that transcriptional increases in cyclin D1 are important. Using a defined Chinese hamster ovary cell model system, we demonstrate that the activity of a cyclin D1 promoter-luciferase construct increases after PRL treatment. Furthermore, this increase in promoter activity is predominantly mediated by the Jak2/Stat5 signaling pathway. The cyclin D1 promoter contains two consensus sequences for PRL-induced Stat binding (GAS sites). Disruption of Stat binding to the distal GAS site destroys PRL-induced promoter activity, whereas disruption of the proximal site has no effect. We have shown by EMSA that PRL induces Stat5a and 5b to bind to the distal GAS site, and immunoprecipitation and subsequent Western analysis of nuclear extracts from PRL-treated cells indicate that Stat5a and 5b can interact as a heterodimer in this system. These data suggest that cyclin D1 may be a target gene for PRL in normal lobuloalveolar development, as well as in the development and/or progression of mammary cancer.