Erythroid colony formation in response to erythropoietin (EPO) stimulation is enhanced by costimulating the cells with prostaglandin-E₂ (PGE₂). The present study further analyzed the underlying mechanisms and demonstrated that EPO-mediated STAT5 transactivation in the erythroid AS-E2 cell line was enhanced 6-fold by PGE₂ (10 μM), without affecting the STAT5 tyrosine phosphorylation or STAT5-DNA binding. Moreover, the PGE₂-enhancing effect was independent of STAT5 serine phosphorylation. In AS-E2 cells STAT5 is constitutively phosphorylated on Ser780 (STAT5A) and EPO-dependently phosphorylated on Ser726/731 (STAT5A/STAT5B), but overexpression of STAT5 serine mutants did not affect STAT5 transactivation. In addition, PGE₂ did not affect STAT5 serine phosphorylation. Instead, the stimulatory effect of PGE₂ on STAT5 signaling could be mimicked by dibutyryl-cyclic adenosine monophosphate (cAMP) and the phosphodiesterase inhibitor IBMX, suggesting that the effect was mediated by cAMP. Activation of the cAMP pathway resulted in cAMP-response element binding protein (CREB) phosphorylation, which was sustained in the presence of EPO plus PGE₂ and transient on EPO stimulation alone. The costimulatory effect of PGE₂ on EPO-mediated STAT5 transactivation was inhibited by overexpression of serine-dead CREB or protein kinase A (PKA) inhibitor (PKI), in contrast to EPO-mediated transactivation, which was PKA independent. Furthermore, CREB-binding protein (CBP)/p300 was shown to be involved in EPO-mediated STAT5 transactivation, and a CBP mutant with increased affinity for CREB resulted in an additional enhancement of the PGE₂ effect. Finally, we demonstrated that the STAT5 target genes Bcl-X, SOCS2, andSOCS3 were up-regulated by costimulation with PGE₂. In summary, these studies demonstrate that PGE₂ enhancement of EPO-induced STAT5 transactivation is mediated by the cAMP/PKA/CREB pathway.