ABSTRACT The Pax-5 gene plays a central role in B cell development, activation and differentiation. At least four different isoforms have been identified, of which isoform Pax-5a has been extensively studied, while functions for alternative isoforms were previously unknown. Here, using a transient transfection system, we provide evidence that alternative isoform Pax-5d acts as a dominant-negative regulator by suppressing activity of Pax-5a in a dose-dependent manner. In contrast, co-expression in the presence of alternative isoform Pax-5e causes an increase in Pax-5a activity. Protein studies on Pax-5e using western blot analysis revealed that this 19 kD isoform migrates as a 27 kD species on SDS-PAGE gels, while a mutant Pax-5e form in which a C-terminal cysteine residue has been mutated, runs at the expected 19 kD. Using both western blot and immunoprecipitation assays, we further provide evidence that this size discrepancy may be caused by a tight association between Pax-5e and a thioredoxin-like factor. Comparison of various B cell lines as well as resting and LPS-activated mature B lymphocytes shows that increased B cell proliferation correlates with increased levels of Pax-5e/thioredoxin, whereas increased Pax-5d amounts correlate with inhibition of cell growth. Together, our results suggest that during activation and differentiation of B lymphocytes, Pax-5a function is modulated by two alternative spliced isoforms: the dominant negative Pax-5d isoform may mediate inhibition of Pax-5a activity in resting B cells, while alternative isoform Pax-5e associated with thioredoxin may increase Pax-5a activity through an unknown (redox) mechanism.