The mechanisms regulating the cellular distribution of STAT family transcription factors remain poorly understood. To identify regions of Stat5B required for ligand-induced nuclear accumulation, we constructed a cDNA encoding green fluorescent protein (GFP) fused to the N terminus of Stat5B and performed site-directed mutagenesis. When co-expressed with growth hormone (GH) receptor in COS-7 cells, GFP-Stat5B is tyrosyl-phosphorylated, forms dimers, and binds DNA in response to GH in a manner indistinguishable from untagged Stat5B. In multiple cell types, laser scanning confocal imaging of GFP-Stat5B co-expressed with GH receptor shows that GFP-Stat5B undergoes a rapid, dramatic accumulation in the nucleus upon GH stimulation. We introduced alanine substitutions in several regions of Stat5B and assayed for GH-dependent nuclear localization. Only the mutation that prevented binding to DNA (466VVVI469) abrogated GH-stimulated nuclear localization. This mutant fusion protein is tyrosyl-phosphorylated and dimerizes in response to GH. These results suggest that either high affinity binding to DNA contributes to nuclear accumulation of Stat5B or that this region is crucial for two functions, namely accumulation of Stat5B in the nucleus and DNA binding. Thus, we have identified a mutant Stat5 defective in nuclear localization despite its ability to be tyrosyl-phosphorylated and to dimerize.