To investigate the role of Stat3 (signal transducer and activator of transcription-3) in neoplastic transformation by the Large Tumor antigen of Simian Virus 40 (TAg), murine fibroblasts were rendered deficient in Stat3 activity through expression of a Stat3-specific siRNA or a Cre-loxP recombination system. The results demonstrate that growth rate, formation of foci overgrowing a monolayer of normal cells and colony formation in soft agar were dramatically reduced in Stat3-deficient cells. In addition, TAg expression led to increased Stat3 tyrosine phosphorylation, DNA binding, and transcriptional activity, suggesting that Stat3 is required for TAg-mediated neoplasia. Stat3 activation was prevented by blocking the binding of TAg to pRb (retinoblastoma-susceptibility gene product), whereas genetic ablation of pRb increased Stat3 activity, suggesting that pRb inactivation by TAg might be responsible for the observed Stat3 activation. Stat3 activation by TAg was suppressed after inhibition of c-Src, JAKs or the insulin-like growth factor receptor. On the other hand, targeted disruption of the Fer kinase or pharmacological inhibition of Abl had no effect. Inhibition of Src activity led to Stat3 down-regulation as well as apoptosis of sparsely growing, TAg-transformed cells. However, Src inhibition was relatively ineffective in confluent cells, consistent with previous results indicating that cell to cell adhesion activates Stat3 by a Src-independent mechanism. Direct Stat3 inhibition on the other hand induced apoptosis very effectively in confluent cells, which could have significant therapeutic implications. Taken together, our results suggest that Stat3 is an important component of a pathway emanating from TAg and leading to neoplastic conversion.