The classical mechanism by which prolactin transduces its signal in mammary epithelial cells is by activation of cytosolic signal transducer and activator of transcription 5 (Stat5) via a plasma membrane-associated prolactin receptor-Janus kinase 2 (Jak2) complex. Here we describe an alternative pathway through which prolactin via Jak2 localized in the nucleus activates the transcription factor nuclear factor 1-C2 (NF1-C2). Previous reports have demonstrated a nuclear localization of Jak2, but the physiologic importance of nuclear Jak2 has not been clear. We demonstrate that nuclear Jak2 regulates the amount of active NF1-C2 through tyrosine phosphorylation and proteasomal degradation. Our data also demonstrate a link between prolactin and p53 as well as the milk gene carboxyl ester lipase through nuclear Jak2 and NF1-C2. Hence, we describe a novel pathway through which nuclear Jak2 is subject to regulation by prolactin in mammary epithelial cells.The mammary gland is a complex organ that undergoes development and differentiation under the control of a number of hormones and growth factors, their receptors, and transcription factors. The polypeptide hormone prolactin has an essential role both in the differentiation of the gland during pregnancy and in the regulation of milk protein gene expression (13). Prolactin receptor signaling can be mediated through several different signaling pathways (2, 4, 9, 10), the principal of which in mammary epithelial cells is that through the receptor-associated tyrosine kinase Janus kinase 2 (Jak2) (21). Binding of prolactin to its receptor activates Jak2, which phosphorylates the transcription factor signal transducer and activator of transcription 5 (Stat5). Phosphorylated Stat5 dimerizes, translocates to the nucleus, and binds to its response elements (35). Both Jak2 and Stat5 have been demonstrated to be essential for mammary gland development and milk protein gene expression (23,29). Apart from the Jak2-Stat5 pathway, the target genes and factors that mediate the action of prolactin in the mammary gland under normal conditions are poorly understood.One important mechanism regulating signal transduction is that through proteolysis (6, 11). The proteasome pathway in particular plays an important role in the degradation of a number of cellular proteins (26,31). Earlier studies have shown that proteasome inhibitors prolong the activity of the Jak-Stat signaling pathway by protecting tyrosine-phosphorylated Jak2 proteins from degradation (33, 38).We have previously identified the transcription factor nuclear factor 1-C2 (NF1-C2) as an important activator of milk genes as well as the p53 tumor suppressor gene in the mouse mammary gland during pregnancy (14,16). This activity indicates that NF1-C2 might participate both in the establishment of a functional gland and in the protection of the gland against tumorigenesis during proliferation. Further, using studies with mouse mammary epithelial NMuMG cells and mammary tissue from heterozygous prolactin receptor knockout mice as a b...