STAT5 is activated in a broad spectrum of human hematologic malignancies. We addressed whether STAT5 activation is necessary for the myelo- and lymphoproliferative disease induced by TEL/JAK2 using a genetic approach. Whereas mice transplanted with bone marrow transduced with retrovirus expressing TEL/JAK2 develop a rapidly fatal myelo- and lymphoproliferative syndrome, reconstitution with bone marrow derived from Stat5ab-deficient mice expressing TEL/JAK2 did not induce disease. Disease induction in the Stat5a/b-deficient background was rescued with a bicistronic retrovirus encoding TEL/JAK2 and Stat5a. Furthermore, myeloproliferative disease was induced by reconstitution with bone marrow cells expressing a constitutively active mutant, Stat5a, or a single Stat5a target, murine oncostatin M (mOSM). These data define a critical role for Stat5a/b and mOSM in the pathogenesis of TEL/JAK2 disease.