Stat3 was initially recognized as a transcription factor and mediates the nuclear action of many different cytokines and growth factors. In addition to its roles in normal cell function, the inappropriate activation of Stat3 in tumor cells has attracted the attention of tumor biologists and has led to the consideration of Stat3 as a drug target. The induction of Stat3 activity under physiological circumstances is transient and many different levels of activation and deactivation have been defined. In addition to kinases and phosphatases, the SOCS proteins and the PIAS proteins have been recognized as negatively regulating components, which fine-tune the extent and the duration of Stat3 function. Its nuclear cytoplasmic shuttling is exquisitely regulated and adds to the complexity of Stat3 action. Newly discovered associations with cytoplasmic molecules suggest functions outside the conventional transcriptional regulation context. High molecular weight transcription complexes suggest that Stat3 might assume roles in transcriptional induction as well as in transcriptional suppression. The aberrant activation in tumor cells and the central function of Stat3 in the communication between cells of the immune system and tumor cells are of great interest for translational research projects and innovative drug development.