The erythropoietin receptor (EpoR) has been previously shown to contain a cytoplasmic C-terminal negative regulatory domain, experimental deletion or mutation of which leads to increased sensitivity of expressing cells to the effects erythropoietin (Epo). We have studied a naturally occurring C-terminal truncation mutant of the human EpoR by stably transfecting the growth factor-dependent hematopoietic tissue culture cell line 32D with expression plasmids containing either the wildtype or mutant human EpoR cDNA, thus rendering the cells dependent on Epo for viability and proliferation. In Epo dose-response assays, cells expressing the mutant EpoR displayed hyperresponsiveness to Epo compared with cells expressing comparable numbers of the wild-type EpoR cultured in the presence of fetal bovine serum. We investigated whether enhanced Epo sensitivity of cells expressing the truncated EpoR is associated with alteration in Epo receptor-mediated activation of Stat5, which could have a role in Epo-induced proliferation. Although maximal Stat5 activation in response to a given concentration of Epo was comparable in 32D cells expressing the wild-type or truncated EpoRs, the time course of Epo-induced Stat5 activation was very different. Gel-mobility shift studies revealed the presence of Stat5 DNA-binding activity in nuclear and cytoplasmic extracts of cells expressing the truncated EpoR for a significantly longer time than that observed in similar extracts of cells expressing the wild-type EpoR consistent with decreased rate of inactivation of Stat5 in cells expressing the mutant EpoR. Epo-dependent tyrosine phosphorylation of both Stat5 and Jak2 was also substantially prolonged in cells expressing the truncated EpoR. These results suggest a role for Stat5 in regulation of Epo-mediated cell growth and implicate altered kinetics of Epo-induced Jak2 and Stat5 activation in the pathogenesis of familial erythrocytosis associated with this naturally occurring EpoR gene mutation.