A family of latent cytoplasmic transcription factors, signal transducers and activators of transcription (STATs), mediates the responsiveness of cells to several cytokines and growth factors. Although mutations of STATs have not been described in human tumors, the activity of several members of the family, such as STAT1, STAT3 and STAT5, is deregulated in a variety of human tumors. STAT3 and STAT5 acquire oncogenic potential through constitutive phosphorylation on tyrosine, and their activity has been shown to be required to sustain a transformed phenotype. Disruption of STAT3 and STAT5 signaling in transformed cells therefore represents an excellent opportunity for targeted cancer therapy. In contrast to STAT3 and STAT5, STAT1 negatively regulates cell proliferation and angiogenesis and thereby inhibits tumor formation. Consistent with its tumor suppressive properties, STAT1 and its downstream targets have been shown to be reduced in a variety of human tumors and STAT1 deficient mice are highly susceptible to tumor formation. In recent years we have gained mechanistic understanding of the pathways whereby STATs convey signals from the cytoplasm to the nucleus. In addition, several endogenous regulators of the JAK/STAT pathway have been described - and their mechanism of action revealed - that profoundly affect signaling by STATs. Both should greatly facilitate the design of drugs with potential to modulate STAT signaling and to restore the homeostasis in tissues where STATs have gone awry.