Tumors that overexpress HER-2/neu receptor or exhibit enhanced EGFR signaling have been reported to possess constitutively activated Src family kinases, especially pp60c-Src. High levels of pp60c-Src activity have also been reported for cell lines that overexpress the EGFR or the chimeric EGFR-HER-2 receptor. It has therefore been suggested that Src kinases may contribute significantly to the oncogenic phenotype of these cells and to the degree of malignancy of tumors that overexpress EGFR family receptors. In this study we show that the induced expression of c-SRC antisense RNA or the application of a selective Src kinase inhibitor induces growth arrest, programmed cell death and reverses the transformed properties of cells that overexpress EGFR or HER-2 receptors. We show that inhibition of Src kinase expression or activity results in the reduction of Stat3 tyrosine phosphorylation, decline of Bcl-XL expression, and induction of cell death. Using a construct in which the promoter of Bcl-X, which possesses putative Stat3 sites, is tethered to the luciferase reporter gene, we show that inhibition of Src activity or expression induces a decline in Bcl-X expression. We also show that the expression of activated Src induces activation of the Bcl-X promoter. This activation is inhibited by the expression of kinase dead Src or of Stat3beta, the dominant-negative form of Stat3. Taken together, these results support the hypothesis that Src positively regulates the transformed phenotype of cells overexpressing EGFR family kinases. Furthermore, these results also suggest that Src positively regulates Bcl-XL expression via Stat3 activation and thus acts not only as a potent mitogenic signaling element, but also as an anti-apoptotic signaling protein. The combination of both activities probably confers upon activated Src its oncogenic activity. Since Src kinase is activated in many tumors, pp60c-Src kinase inhibitors may prove useful as anti-cancer agents for many types of cancer.