ABSTRACT: The essential role of prolactin (PRL) in normal mammary gland growth and differentiation has implicated this hormone in the development and progression of breast cancer. Although Stat5 is the best-characterized mediator of PRL signals, PRL also activates multiple other signals, whose roles in normal and pathologic processes are not well understood. We have shown that PRL stimulates activating protein-1 (AP-1) activity in breast cancer cells, and can cooperate with estradiol in this pathway. AP-1 modulates many processes critical for carcinogenesis, including cell proliferation, survival, transformation, invasion and angiogenesis, and is elevated in many neoplasms, including breast tumors. Here, we investigated the relationship between PRL signals to AP-1 and Stat5. We found that PRL activation of Stat5a and Stat5b, but not Stat1 or Stat3, reduced PRL signals to AP-1, without altering estradiol-induced AP-1 activity. The truncation mutant, Stat5/Delta53C, but not Stat5Y699F, was an effective inhibitor, consistent with a requirement for Stat5 dimerization and nuclear accumulation, but not its C-terminal transactivation activity. The association of Stat5 with AP-1 proteins suggests that this underlies the inhibition. Predictably, the ability of PRL to activate Stat5 and AP-1 was inversely related in mammary cell lines. Further, reduction of Stat5 protein with siRNA in T47D cells, which contain elevated Stat5, increased PRL-induced AP-1 signals, transcripts for the AP-1 target, matrix metalloproteinase-2 and associated invasive behavior. This study points to the importance of cell context in determining the spectrum of PRL-induced actions, which is critical for understanding the contributions of PRL to breast cancer.