Stage-specific rearrangement of Ig H and L chain genes poses an enigma because both processes use the same recombinatorial machinery, but the H chain locus is accessible at the pro-B cell stage, whereas the L chain loci become accessible at the pre-B cell stage. Transcription factor STAT5 is a positive-acting factor for rearrangement of distal V H genes, but attenuation of IL-7 signaling and loss of activated STAT5 at the pre-B cell stage corresponds with Igk locus accessibility and rearrangement, suggesting that STAT5 plays an inhibitory role at this locus. Indeed, loss of IL-7 signaling correlates with increased activity at the Igk intron enhancer. However, the κE3′ enhancer must also be regulated as this enhancer plays a role in Igk rearrangement. We show in this study that STAT5 can repress κE3′ enhancer activity. We find that STAT5 binds to a site that overlaps the κE3′ PU.1 binding site. We observed reciprocal binding by STAT5 and PU.1 to the κE3′ enhancer in primary bone marrow cells, STAT5 and PU.1 retrovirally transduced pro-B cell lines, or embryonic stem cells induced to differentiate into B lineage cells. Binding by STAT5 corresponded with low occupancy of other enhancer binding proteins, whereas PU.1 binding corresponded with recruitment of IRF4 and E2A to the κE3′ enhancer. We also find that IRF4 expression can override the repressive activity of STAT5. We propose a novel PU.1/STAT5 displacement model during B cell development, and this, coupled with increased IRF4 and E2A activity, regulates κE3′ enhancer function.