Jak/STAT pathways influence cell-fate decisions made by differentiating naïve T cells, regulate the intensity and duration of inflammatory responses and are implicated in pathogenic mechanisms of a number of chronic inflammatory diseases. Among the STATs, the STAT3 protein has emerged as an important determinant of whether the naïve T cell differentiates into regulatory (Treg) or an inflammatory (Th17) T cell lineage. STAT3 also has potent anti-inflammatory effects and regulates critical cellular processes such as, cell growth, apoptosis and transcription of inflammatory genes. Dysregulation of STAT3 pathway has therefore been implicated in the development of chronic inflammatory diseases, as well as, a number of malignant and neurodegenerative diseases. This review focuses on recent findings regarding the role of STAT3 in immunity, with particular emphasis on T cell lineage specification and disease etiology. New insights from animal models of uveitis, multiple sclerosis and inflammatory bowel diseases are discussed as exemplars of critical roles that STAT3 pathways play in inflammatory diseases and on how inhibiting STAT3 can be exploited to mitigate pathogenic autoimmunity.