Cytokines govern the growth, differentiation and functional activity of cells in the haematopoietic and immune systems. Of these, interleukin-3 (IL-3) has a broad range of function, with actions on cells at various stages of haematopoietic development. Recently, attention has been focused on the role of the Janus kinase (JAK) family of kinases in cytokine action. Many cytokine receptors have now been shown to associate physically with and activate specific JAK kinases. JAK kinases regulate latent, cytoplasmic transcription factors termed STATs (Signal transducers and activators of transcription). IL-3 and granulocyte-macrophage colony-stimulating factor (GM-CSF) activate JAK2 and STAT5. Because many cytokines induce tyrosine phosphorylation in lymphoid progenitor cells, and constitutive tyrosine phosphorylation is commonly observed in B-lineage leukaemias, attempts have been made to develop protein tyrosine kinase (PTK) blockers of leukaemic cell growth. Specific tyrosine kinase blockers of JAK2 were reported to selectively inhibit leukaemic cell growth in vitro and in vivo by inducing programmed cell death, with no deleterious effect on normal haematopoiesis. In order to study the role of STAT5 in IL-3 signaling, and to find new growth inhibitors of leukaemic cells, we have screened inhibitors of STAT5 from microbial metabolites using a luciferase reporter system in IL-3 dependent Ba/F3 cells. In the course of our screening program using this system, we have found a new compound, cytovaricin B (1) from the culture broth of Streptomyces torulosus 3197-GM1. In this paper, we report the fermentation, isolation, physico-chemical properties, structure elucidation and inhibitory activity of 1.