CD24 is a glycosyl-phosphatidylinositol-anchored membrane protein that is frequently over-expressed in a variety of human carcinomas and is correlated with poor prognosis. In cancer cell lines, changes of CD24 expression can alter several cellular properties in vitro and tumor growth in vivo. However, little is known about how CD24 mediates these effects. Here we have analyzed the functional consequences of CD24 knock-down or over-expression in human cancer cell lines. Depletion of CD24 reduced cell proliferation and adhesion, enhanced apoptosis, and regulated the expression of various genes some of which were identified as STAT3 target genes. Loss of CD24 reduced STAT3 and FAK phosphorylation. Diminished STAT3 activity was confirmed by specific reporter assays. We found that reduced STAT3 activity after CD24 knock-down was accompanied by altered Src phosphorylation. Silencing of Src, similar to CD24, targeted the expression of prototype STAT3-regulated genes. Likewise, the over-expression of CD24 augmented Src-Y416 phosphorylation, the recruitment of Src into lipid rafts and the expression of STAT3-dependent target genes. An antibody to CD24 was effective in reducing tumor growth of A549 lung cancer and BxPC3 pancreatic cancer xenografts in mice. Antibody treatment affected the level of Src-phosphorylation in the tumor and altered the expression of STAT3 target genes. Our results provide evidence that CD24 regulates STAT3 and FAK activity and suggest an important role of Src in this process. Finally, the targeting of CD24 by antibodies could represent a novel route for tumor therapy.