Stat3 (signal transducer and activator of transcription-3) activity is required for transformation by a number of oncogenes, while a constitutively active form of Stat3 alone is sufficient to induce neoplastic transformation. Although in most instances Stat3 is growth-promoting, the impact of cell density on Stat3 activation status and the biological importance of Stat3 during growth arrest have not been characterized. Previous results indicated that cell density alters tyrosine phosphorylation levels of cultured cells. Since signalling through Stat3 is determined by a key phosphorylation at tyr705, we examined the effects of cell density upon Stat3 activity in normal breast epithelial cells, breast carcinoma lines and normal mouse fibroblasts. Intriguingly, the results revealed a dramatic increase in Stat3, tyr705 phosphorylation and activity with cell density, which gradually declined at later stages. This activation was dependent upon cell-cell contact, since it was eliminated if cell adhesion was disrupted through calcium chelation, while it was reinstated through cell aggregation. Furthermore, this activation was suppressed following inhibition of JAKs (Janus kinases) but not inhibition of Fer, IGF1-R, or kinases of the c-Src family. On the other hand, constitutively active Stat3 in carcinoma lines, known to harbor activated Src, was blocked by pharmacological inhibitors of Src as well as JAKs. These results point to the existence of two distinct pathways of Stat3 activation in breast carcinomas, based on Src dependence. More importantly, our results suggest that Stat3 activity is upregulated during the confluence-mediated growth arrest by a signalling mechanism that requires JAKs.