PECAM-1 (CD31) is a member of the immunoglobin (Ig) superfamily of cell adhesion molecules whose expression is restricted to hematopoietic and vascular cells. PECAM-1 can recruit adapter and signaling molecules via its immunoreceptor tyrosine activation motif (ITAM), suggesting that PECAM-1 plays a role in signal transduction pathways. To study the involvement of PECAM-1 in signaling cascades in vivo, we used the major histocompatibility (MHC) I gene promoter to target ectopic PECAM-1 expression in transgenic mice. We noted an attenuation of mammary gland development at early stages of virgin ductal branching morphogenesis. STAT5a, a modulator of milk protein gene expression during lactation, was localized to the nuclei of ductal epithelial cells of 6-week-old virgin PECAM-1 transgenics, but not in control mice. This correlated with decreases in ductal epithelial cell proliferation and induction of p21, an inhibitor of cell cycle progression. Using in vitro model systems we demonstrated PECAM-1/STAT5a association and found that residue Y701 in PECAM-1's cytoplasmic tail is important for PECAM-1/STAT5 association and that PECAM-1 modulates increases in STAT5a tyrosine phosphorylation levels. We suggest that by serving as a scaffolding, PECAM-1 can bring substrates (STAT5a) and enzymes (a kinase) into close proximity, thereby modulating phosphorylation levels of selected proteins, as previously noted for beta-catenin.