Prolactin (PRL) is necessary for the proliferation of cloned T lymphocytes in response to interleukin-2 (IL-2). Translocation of PRL into the nucleus occurs during IL-2--stimulated mitogenesis. Therefore, the function of intranuclear PRL in T cell proliferation was tested. Eukaryotic expression vectors were prepared to express wild-type PRL [PRL(WT)], PRL that lacks the signal sequence for translocation into the endoplasmic reticulum [PRL(ER-)], and chimeric PRL in which the signal peptide was replaced with the sequence that directs the nuclear translocation of the SV40 large T antigen [PRL(NT+)]. Expression of these constructs in a T cell line (Nb2) responsive to PRL and IL-2 resulted in localization of PRL in the extracellular milieu, cytoplasm, or nucleus, respectively. Stimulation with IL-2 alone resulted in a five- to tenfold increase in the incorporation of [3H]thymidine by cells expressing PRL(NT+) or PRL(WT) as compared to PRL(ER-) or the parental Nb2 cells. Only the PRL(NT+) clone proliferated continuously with IL-2 stimulation in the presence of antiserum to PRL. These results demonstrate that nuclear PRL is necessary for IL-2--stimulated proliferation and suggest that a peptide hormone can function in the nucleus without binding to its cell surface receptor.