Signal transducer and activator of transcription 3 (STAT3) is linked to multiple cancers, including pulmonary adenocarcinoma. However, the role of STAT3 in lung cancer pathogenesis has not been determined. Using lung epithelial-specific inducible knockout strategies, we demonstrate that STAT3 has contrasting roles in the initiation and growth of both chemically and genetically induced lung cancers. Selective deletion of lung epithelial STAT3 in mice before cancer induction by the smoke carcinogen, urethane, resulted in increased lung tissue damage and inflammation, K-Ras oncogenic mutations and tumorigenesis. Deletion of lung epithelial STAT3 after establishment of lung cancer inhibited cancer cell proliferation. Simultaneous deletion of STAT3 and expression of oncogenic K-Ras in mouse lung elevated pulmonary injury, inflammation and tumorigenesis, but reduced tumor growth. These studies indicate that STAT3 prevents lung cancer initiation by maintaining pulmonary homeostasis under oncogenic stress, whereas it facilitates lung cancer progression by promoting cancer cell growth. These studies also provide a mechanistic basis for targeting STAT3 to lung cancer therapy.