Members of the STAT family of transcriptional regulators modulate the expression of a variety of gene products that promote cell proliferation, survival and transformation. Although initially identified as mediators of cytokine signaling, the STAT proteins are also activated by, and thus may contribute to the actions of, polypeptide growth factors. To define the mechanism by which these factors activate STATs, we examined the process of Stat3 activation in Balb/c-3T3 fibroblasts treated with platelet-derived growth factor (PDGF). As STATs are activated by tyrosine phosphorylation, and as PDGF receptors are ligand-activated tyrosine kinases, we considered the possibility that Stat3 interacts with and is phosphorylated by PDGF receptors. We find that Stat3 associates with PDGF beta receptors in both the presence and, surprisingly, the absence of PDGF. Moreover, Stat3 was phosphorylated on tyrosine in PDGF beta receptor immunoprecipitates of PDGF-treated but not untreated cells. Although required, receptor activation was insufficient for Stat3 activation. When added to cells in combination with a pharmacologic agent (PD180970) that specifically inhibits the activity of Src family tyrosine kinases, PDGF did not activate Stat3 as monitored by electrophoretic mobility shift assay. PD180970 did not affect MAPK activation by PDGF or the JAK-dependent activation of Stat3 by interleukin-6. The necessity of Src activity for Stat3 activation by PDGF was further evidenced by data showing the presence of Src in complexes containing both Stat3 and PDGF beta receptors in PDGF-treated cells. These results suggest a novel mechanism of STAT activation in which inactive Stat3 pre-assembles with inactive PDGF receptors, and in response to ligand binding and in a manner dependent on Src kinase activity, is rapidly phosphorylated and activated. Additional data demonstrate that Src kinase activity is also required for PDGF stimulation of DNA synthesis in density-arrested cells.