STATs are latent transcription factors that mediate cytokine- and growth factor-directed transcription. In many human cancers and transformed cell lines, Stat3 is persistently activated, and in cell culture, active Stat3 is either required for transformation, enhances transformation, or blocks apoptosis. We report that substitution of two cysteine residues within the C-terminal loop of the SH2 domain of Stat3 produces a molecule that dimerizes spontaneously, binds to DNA, and activates transcription. The Stat3-C molecule in immortalized fibroblasts causes cellular transformation scored by colony formation in soft agar and tumor formation in nude mice. Thus, the activated Stat3 molecule by itself can mediate cellular transformation and the experiments focus attention on the importance of constitutive Stat3 activation in human tumors.