Granulysin is a cytolytic effector molecule used by lymphocytes to kill tumor and microbial cells. Regulation of granulysin production is complex. A significant delay (5 days) following stimulation of CD4+ T cells with IL-2 occurs before granulysin is produced. Unfortunately, the mechanisms responsible for this delay are unknown. We have recently demonstrated that granulysin-mediated killing of Cryptococcus neoformans by CD4+ T cells is defective during HIV infection. This is because CD4+ T cells from HIV-infected patients fail to produce granulysin in response to IL-2 activation. The present studies examined the mechanism of delayed production of granulysin and the mechanism of the defect in HIV patients. We demonstrate that IL-2 initially requires both STAT5 and PI3K activation to increase expression of IL-2Rβ, produce granulysin, and kill C. neoformans. The increased expression of IL-2Rβ precedes granulysin, and preventing the increased expression of IL-2Rβ using small interfering RNA knockdown abrogates granulysin expression. Moreover, following the increased expression of IL-2Rβ, blocking subsequent signaling by IL-2 using IL-2Rβ-specific blocking Abs abrogates expression of granulysin. Finally, CD4+ T cells from HIV-infected patients, who are defective in both STAT5 and PI3K signaling, fail to express IL-2Rβ and fail to produce granulysin. These results suggest that IL-2 signals via PI3K and STAT5 to increase expression of IL-2Rβ, which in turn is required for production of granulysin. These results provide a mechanism to explain the “late” production of granulysin during normal T cell responses, as well as for defective granulysin production by CD4+ T cells in HIV-infected patients.