Signal transducers and activators of transcription (STATs) play a central role in cytokine signaling. Activating and repressing gene transcription is a dynamic process involving chromatin remodeling by histone acetylases and deacetylases, yet the role of this process in STAT-dependent transcription remains largely unknown. In a search for STAT5-interacting proteins by yeast two-hybrid screening, we identified the nuclear receptor co-repressor SMRT (silencing mediator for retinoic acid receptor and thyroid hormone receptor) as a potential STAT5-binding partner. SMRT binds to both STAT5A and 5B, and strongly repressed STAT5-dependent transcription in vitro. SMRT binds to the N-terminal coiled-coil domain of STAT5 and a mutation within this region previously found to render STAT5 hyperactive in response to cytokines abolished the interaction with SMRT. Overexpression of SMRT suppressed the induction of STAT5 target genes by interleukin-3, whereas the histone deacetylase inhibitor trichostatin A effectively enhanced and prolonged their expression. Together, these findings illuminate the potential role of SMRT in down-regulating STAT5 activity, with a consequent reduction of STAT5 target gene expression.