STAT5B is often mutated in hematopoietic malignancies. The most frequent STAT5B mutation, Asp642His (N642H), has been found in over 90 leukemia and lymphoma patients. Here, we used the Vav1 promoter to generate transgenic mouse models that expressed either human STAT5B or STAT5BN642H in the hematopoietic compartment. While STAT5B-expressing mice lacked a hematopoietic phenotype, the STAT5BN642H-expressing mice rapidly developed T cell neoplasms. Neoplasia manifested as transplantable CD8+ lymphoma or leukemia, indicating that the STAT5BN642H mutation drives cancer development. Persistent and enhanced levels of STAT5BN642H tyrosine phosphorylation in transformed CD8+ T cells led to profound changes in gene expression that were accompanied by alterations in DNA methylation at potential histone methyltransferase EZH2-binding sites. Aurora kinase genes were enriched in STAT5BN642H-expressing CD8+ T cells, which were exquisitely sensitive to JAK and Aurora kinase inhibitors. Together, our data suggest that JAK and Aurora kinase inhibitors should be further explored as potential therapeutics for lymphoma and leukemia patients with the STAT5BN642H mutation who respond poorly to conventional chemotherapy.