In insulinoma cell lines proliferation and insulin gene transcription are stimulated by growth hormone and prolactin, which convey their signals through the transcription factors Stat5a and 5b (referred to as Stat5). However, the contribution of Stat5 to the physiology of β-cells in vivo could not be assessed directly since Stat5-null mice die perinataly. To explore the physiological role of Stat5 in the mouse, the corresponding gene locus targeted with loxP sites was inactivated in β-cells using two lines of Cre recombinase expressing transgenic mice. While the RIP-Cre transgene is active in pancreatic β-cells and the hypothalamus, the Pdx1-Cre transgene is active in precursor cells of the endocrine and exocrine pancreas. Mice carrying two floxed Stat5alleles and a RIP-Cre transgene developed mild obesity, were hyperglycemic and exhibited impaired glucose tolerance. Since RIP-Cre transgenic mice by themselves display some glucose intolerance, the significance of these data is unclear. In contrast, mice, in which the Stat5 locus had been deleted with the Pdx1-Cre transgene, developed functional islets and were glucose tolerant. Mild glucose intolerance occurred with age. We conclude that Stat5 is not essential for islet development but may modulate β-cell function.