The Stat5 transcription factors Stat5a and Stat5b have been implicated in lymphoid development and transformation. Most studies have employed Stat5a/b-deficient mice where gene targeting disrupted the first protein-coding exon, resulting in the expression of N-terminally truncated forms of Stat5a/b (Stat5a/b^ΔN/ΔN mice). We have now reanalyzed lymphoid development in Stat5a/b^null/null mice having a complete deletion of the Stat5a/b gene locus. The few surviving Stat5a/b^null/null mice lacked CD8⁺ T lymphocytes. A massive reduction of CD8⁺ T cells was also found in Stat5a/b^fl/fllck-cre transgenic animals. While γδ T-cell receptor–positive (γδTCR⁺) cells were expressed at normal levels in Stat5a/b^ΔN/ΔN mice, they were completely absent in Stat5a/b^null/null animals. Moreover, B-cell maturation was abrogated at the pre–pro-B-cell stage in Stat5a/b^null/null mice, whereas Stat5a/b^ΔN/ΔN B-lymphoid cells developed to the early pro-B-cell stage. In vitro assays using fetal liver-cell cultures confirmed this observation. Most strikingly, Stat5a/b^null/null cells were resistant to transformation and leukemia development induced by Abelson oncogenes, whereas Stat5a/b^ΔN/ΔN-derived cells readily transformed. These findings show distinct lymphoid defects for Stat5a/b^ΔN/ΔN and Stat5a/b^null/null mice and define a novel functional role for the N-termini of Stat5a/b in B-lymphoid transformation.