Cytokine regulation of B cell development was analyzed using interleukin-2 (IL-2)-induced transcription of the J chain gene as a model system. A nuclear target of the IL-2 signal was identified as the Pax5 transcription factor, BSAP, which recognizes a negative regulatory motif in the J chain promoter. Functional assays showed that BSAP mediates the silencing of the J chain gene during the early stages of B cell development, but repression is relieved during the antigen-driven stages in a concentration-dependent manner by an IL-2-induced down-regulation of BSAP RNA expression. At the low levels present in J chain-expressing plasma cells, BSAP repression could be overridden by positive-acting factors binding to down-stream J chain promoter elements. Overexpression of BSAP in these cells reversed the positive regulation and inhibited J chain gene transcription. Thus, IL-2 regulation of BSAP concentration may provide a mechanism for controlling both repressor and activator functions of BSAP during a B cell immune response.