T helper 1 (T(H)1) differentiation and IFN-gamma production are crucial in cell-mediated immune responses. IL-12 is an important regulator of this process and mediates its effects through signal transducer and activator of transcription 4 (STAT4). IFN-gamma production is also regulated by the p38 mitogen-activated kinase pathway, although the mechanisms are ill-defined. We show here that GADD45-beta and GADD45-gamma can induce STAT4 S721 phosphorylation via the MKK6/p38 pathway. Thus, STAT4 could be a target that accounts for the defects in cell-mediated immunity associated with perturbations in the p38 pathway. To investigate the biological significance of STAT4 S721 phosphorylation, we reconstituted primary spleen cells from STAT4-deficient mice with wild-type and mutated STAT4, by using a retroviral gene transduction. We demonstrated that expression of wild-type STAT4, but not the S721A mutant, restored normal T(H)1 differentiation and IFN-gamma synthesis. The inability of STAT4 S721 to restore IFN-gamma production was not caused by decreased IL-12R expression because the STAT4 S721 mutant also failed to restore IFN-gamma production in STAT4-deficient IL-12Rbeta2 transgenic cells. Importantly, STAT4 S721A-transduced cells showed normal proliferative response to IL-12, illustrating that serine phosphorylation is not required for IL-12-induced proliferation. Additionally, the results imply the existence of STAT4 serine phosphorylation-dependent and -independent target genes. We conclude that phosphorylation of STAT4 on both tyrosine and serine residues is important in promoting normal T(H)1 differentiation and IFN-gamma secretion.