Full activation of T cells requires three sequential signals. Engagement by antigen presenting cells (APC) delivers signals 1/2, whereas signal 3 is delivered by multiple cytokines to regulate the immune homeostasis by influencing proliferation, differentiation, and survival/death. Signaling by cytokines acting through their receptors is delivered by two major molecular families, namely Janus tyrosine kinases (Jaks) and signal transducers and activators of transcription (Stats). Findings obtained from mice genetically deficient in Jaks and Stats suggest that these molecules may serve as therapeutic targets to prevent allograft rejection, induce transplantation tolerance, and inhibit autoimmune disease and lymphoid-derived tumors. This review describes the role of Jak tyrosine kinases and Stat transcription factors and their putative function in regulating T and B cell activity.