Signal transducers and activators of transcription (STATs) are latent cytoplasmic transcription factors that transduce signals from the cell membrane to the nucleus upon activation by tyrosine phosphorylation. Several protein-tyrosine kinases can induce phosphorylation of STATs in cells, including Janus kinase (JAK) and Src family kinases. One STAT family member, Stat3, is constitutively activated in Src-transformed NIH3T3 cells and is required for cell transformation. However, it is not entirely clear whether Src kinase can phosphorylate Stat3 directly or through another pathway, such as JAK family kinases. To address this question, we investigated the phosphorylation of STATs in baculovirus-infected Sf-9 insect cells in the presence of Src. Our results show that Src can tyrosine-phosphorylate Stat1 and Stat3 but not Stat5 in this system. The phosphorylated Stat1 and Stat3 proteins are functionally activated, as measured by their abilities to specifically bind DNA oligonucleotide probes. In addition, the JAK family member Jak1 efficiently phosphorylates Stat1 but not Stat3 in Sf-9 cells. By contrast, we observe that AG490, a JAK family-selective inhibitor, and dominant negative Jak1 protein can significantly inhibit Stat3-induced DNA binding activity as well as Stat3-mediated gene activation in NIH3T3 cells. Furthermore, wild-type or kinase-inactive platelet-derived growth factor receptor enhances Stat3 activation by v-Src, consistent with the receptor serving a scaffolding function for recruitment and activation of Stat3. Our results demonstrate that Src kinase is capable of activating STATs in Sf-9 insect cells without expression of JAK family members; however, Jak1 and platelet-derived growth factor receptor are required for maximal Stat3 activation by Src kinase in mammalian cells. Based on these findings, we propose a model in which Jak1 serves to recruit Stat3 to a receptor complex with Src kinase, which in turn directly phosphorylates and activates Stat3 in Src-transformed fibroblasts.