Signal transducers and activators of transcription (STATs) have been reported to play a critical role in the differentiation of several myeloid cell lines, although the importance of STATs in the differentiation of primary human hematopoietic cells remains to be established. Terminal eosinophil differentiation is induced by interleukin-5 (IL-5), which has also been demonstrated to activate STAT5. We have investigated whether STAT5 plays a critical role during eosinophil differentiation using umbilical cord blood–derived CD34⁺ cells. In this ex vivo system, STAT5 expression and activation are high early during differentiation, and STAT5 protein expression is down-regulated during the final stages of eosinophil differentiation. Retroviral transductions were performed to ectopically express wild-type and dominant-negative STAT5a (STAT5aΔ750) in CD34⁺ cells. Transduction of cells with STAT5a resulted in enhanced proliferation compared with cells transduced with empty vector alone. Interestingly, ectopic expression of STAT5a also resulted in accelerated differentiation. In contrast, ectopic expression of STAT5aΔ750 resulted in a block in differentiation, whereas proliferation was also severely inhibited. Similar results were obtained with dominant-negative STAT5b. Forced expression of STAT5a enhanced expression of the STAT5 target genes Bcl-2 andp21^WAF/Cip1, suggesting they may be important in STAT5a-mediated eosinophil differentiation. These results demonstrate that STAT5 plays a critical role in eosinophil differentiation of primary human hematopoietic cells.