Stat3alpha and Stat3beta are two Stat3 isoforms with marked quantitative differences in their DNA binding activities. To examine the molecular basis of the differential DNA binding activities, we measured DNA binding strength and dimer stability, two possible mechanisms responsible for these differences. Stat3alpha and Stat3beta showed no difference in DNA binding strength, i.e. they had similar association and dissociation rates for DNA binding. However, competition analyses performed with dissociating reagents including an anti-phosphotyrosine antibody, SH2 domain protein, and a phosphopeptide demonstrated that Stat3beta dimers are more stable than Stat3alpha dimers. We report here that dimer stability of activated forms plays a critical role in determining DNA binding activity of Stat3 isoforms. We found that C-terminal deletions of Stat3alpha increased both DNA binding activity and dimer stability of Stat3alpha. Our findings suggest that the acidic C-terminal region of Stat3alpha does not interfere with the DNA binding of activated Stat3alpha dimers, but destabilizes the dimeric forms of Stat3alpha. We propose that dimer stability described in vitro may be the underlying mechanism of in vivo stability of activated Stat3 proteins, regulating dephosphorylation of tyrosine 705.