The signal transducer and activator of transcription (STAT) proteins have been implicated in cytokine-regulated proliferation, differentiation and cell survival. Granulocyte colony-stimulating factor (G-CSF), a regulator of granulocytic differentiation, induces a robust and sustained activation of STAT3. Here, we show that introduction of dominant negative (DN) forms of STAT3 interferes with G-CSF-induced differentiation and survival in murine 32D cells. G-CSF induces expression of the cyclin-dependent kinase (cdk) inhibitor p27(KiP1) (but not p21(CiP1)), which is completely blocked by DN-STAT3. The ability of tyrosine-to-phenylalanine substitution mutants of the G-CSF receptor to activate STAT3 strongly correlated with their capacity to induce p27 expression and their ability to mediate differentiation and survival, suggesting a causal relationship between STAT3 activation, p27 expression and the observed cellular responses. We identified a putative STAT binding site in the promoter region of p27 that showed both STAT3 binding in electrophoretic mobility shift assays and functional activity in luciferase reporter assays. Finally, we studied G-CSF-induced responses in primary bone marrow and spleen cells of p27-deficient mice. Compared with wild-type, myeloid progenitors from p27-deficient mice showed significantly increased proliferation and reduced differentiation in response to G-CSF. These findings indicate that STAT3 controls myeloid differentiation, at least partly, via upregulation of p27(Kip1).