Prolactin binds to a member of the cytokine receptor superfamily. The cytoplasmic domain of the prolactin receptor (PrlR)4 displays no enzymatic activity yet prolactin treatment leads to the induction of protein tyrosine phosphorylation. PrlR is associated with JAK2, a protein tyrosine kinase whose activity is stimulated following receptor dimerization. JAK2 subsequently phosphorylates PrlR and other cellular proteins which are recruited to the activated receptor complex. Among the JAK2 substrates is the transcription factor Stat5 whose phosphorylation mediates the transcriptional activation of β-casein gene expression. In this review we discuss the prolactin induced signaling pathways which mediate differentiation of the mammary gland.