A rapid increase in the tyrosine phosphorylation of signal transducer and activators of transcription (STAT) proteins has been extensively documented in cells stimulated with cytokines and growth factors, but virtually nothing is known about the regulation of STAT5 activation in breast cancer cells stimulated with basement membrane (BM) components. Stimulation of MCF7 cells with type IV collagen (Col-IV) promoted a striking increase in the phosphorylation of STAT5 at Tyr-694, as revealed by site-specific antibodies that recognized the phosphorylated state of this residue. In addition, Col-IV also stimulated STAT5 nuclear translocation and an increased in STAT5 DNA binding activity. Treatment with the selective Src family inhibitor pyrazolopyrimidine PP-2 prevented STAT5 phosphorylation at Tyr-694, nuclear translocation of STAT5 and the STAT5-DNA complex formation. Our results demonstrate, for the first time, that stimulation with Col-IV induces STAT5 phosphorylation of endogenous STAT5 at Tyr-694, nuclear translocation of STAT5 and increases in STAT5 DNA binding activity via a Src-dependent pathway in MCF7 cells.