A Drosophila Stat gene (D-Stat) with a zygotic segmental expression pattern was identified. This protein becomes phosphorylated on Tyr-704 when coexpressed in Schneider cells with a Drosophila janus kinase (JAK), Hopscotch (HOP). The phosphorylated protein binds specifically to the consensus sequence TTCCCGGAA. Suppressor mutations of hopTum-I, a dominant hyperactive allele of hop whose phenotype is hematocyte overproduction and tumor formation, were selected. One of these mutants, statHJ, mapped to the same chromosomal region (92E) as does D-Stat, had an incompletely penetrant pair rule phenotype, and exhibited aberrant expression of the pair rule gene even skipped (eve) at the cellular blastoderm stage. Two D-STAT-binding sites were identified within the eve stripe 3 enhancer region. Mutations in either of the STAT-binding sites greatly decreased the stripe 3 expression in transgenic flies. Clearly, the JAK-STAT pathway is connected to Drosophila early development.