We searched for immediate early cytokine responsive genes and isolated a novel gene, CIS (Cytokine Inducible SH2 containing protein) that is induced in hematopoietic cells by a subset of cytokines including interleukin-2 (IL-2), IL-3, and erythropoietin (EPO). The mutant IL-2 receptor that fails to activate STAT5 could not induce CIS, suggesting that STAT5 is involved in the cytokine-inducible expression of CIS. We cloned the 5'-flanking region of the CIS gene and found that about 200 bases upstream of the transcription-initiation site contain four potential STAT5 binding sites (MGF boxes). Luciferase reporter assays showed that these MGF boxes were essential for EPO-dependent promoter activity. Expression of STAT5 and the EPO receptor in HEK293 cells conferred EPO-dependent activation of the CIS promoter. These data indicate that CIS is a target of the JAK-STAT5 pathway of cytokine receptors. CIS contains an SH2 domain and binds to tyrosine-phosphorylated EPO and IL-3 receptors. In HEK293 cells expressing STAT5 and the EPO receptor, EPO-dependent tyrosine phosphorylation of STAT5, as well as EPO-dependent CIS-promoter activation, was suppressed when CIS was coexpressed. Moreover, the induction of oncostatin M, another STAT5 target, as well as the tyrosine-phosphorylation of STAT5, were partially suppressed by CIS expression in Ba/F3 cells. Thus, CIS is a feedback modulator of STAT5; its expression is induced by STAT5 and it negatively modulates STAT5 activation.