Cytokines that use the common gamma chain γc are critical for lymphoid development and function. Mutations of the IL-7 receptor, γc, or its associated kinase, Jak3, are the major cause of human severe combined immunodeficiency. Although activated by IL-7, Stat5a/b (Stat, signal transducer and activator of transcription) have been thought to play limited roles in lymphoid development. However, we now show that mice completely deficient in Stat5a/b have severely impaired lymphoid development and differentiation. Absence of Stat5 also abrogates T cell receptor γ rearrangement and survival of peripheral CD8⁺ T cells. Thus, deficiency of Stat5 results in severe combined immunodeficiency, similar in many respects to deficiency of IL-7R, γc, and Jak3.