The non-histone chromosomal protein HMG-I(Y) participates in repression of transcription directed by a promoter which confers interleukin 4 (IL-4)-inducible activation in transfected B cell lines. Metabolic labeling, phosphoamino acid analyses, and in vitro phosphorylation studies demonstrate that IL-4 induces serine phosphorylation of HMG-I(Y) in B lymphocytes. Phosphopeptide mapping shows that the predominant site of phosphorylation contains a casein kinase II consensus motif. The immunosuppressive agent rapamycin has been shown preferentially to inhibit IgE production by IL-4-treated human B cells. It is shown here that rapamycin inhibits both activation of the human germ line epsilon promoter by IL-4 and IL-4-inducible phosphorylation of HMG-I(Y). These findings demonstrate a rapamycin-sensitive pathway that transduces signals from the IL-4 receptor to nuclear factors that regulate inducible transcription. The affinity of normal nuclear HMG-I(Y) for DNA is increased by dephosphorylation in vitro, whereas in vitro kinase reactions using casein kinase II decrease recombinant HMG-I(Y) binding to DNA. These data further suggest a novel mechanism in which phosphorylation triggered by IL-4 or other cytokines could regulate the effects of HMG-I(Y) on gene transcription.