In numerous studies on mammary epithelial cell lines multiple factors, added to the medium or contained in the serum, were required for casein gene expression. It has been shown in these systems that the mammary gland factor (MGF) is implicated in the activation of the -casein gene promoter. In the present study, we determined the relationship between known agents that affect casein gene expression and MGF activity using the properties of rabbit primary mammary epithelial cells to respond to PRL alone, when cultured in chemically defined medium. We demonstrate that MGF is rapidly activated by PRL alone or by human growth hormone, a natural ligand of many PRL receptors (PRL-Rs), in the cytoplasm and accumulated in the nucleus. The MGF activation by PRL occurred in the absence of endogenous extracellular matrix, a condition where casein synthesis is known to be markedly reduced. Different inhibitors of protein-tyrosine kinases, which have been shown to reduce casein mRNA synthesis, but not of protein kinase C, decrease the MGF activity. A tyrosine phosphatase inhibitor, sodium pervanadate, induced two GAS-binding complexes related to MGF and STAT1. Our data show that MGF is a latent cytoplasmic factor rapidly activated in mammary epithelial cells, by a mechanism involving a tyrosine kinase and a tyrosine phosphatase.