The signalling pathway that comprises JAK kinases and STAT proteins (for signal transducer and activator of transcription) is important for relaying signals from various cytokines outside the cell to the inside(1-3). The feedback mechanism responsible for switching off the cytokine signal has not been elucidated. We now report the cloning and characterization of an inhibitor of STAT activation which we name SSI-1 (for STAT-induced STAT inhibitor-1). We found that SSI-1 messenger RNA was induced by the cytokines interleukins 4 and 6 (IL-4, IL-6), leukaemia-inhibitory factor (LIF), and granulocyte colony-stimulating factor (G-CSF). Stimulation by IL-6 or LIF of murine myeloid leukaemia cells (M1 cells) induced SSI-1 mRNA expression which was blocked by transfection of a dominant-negative mutant of Stat3, indicating that the SSI-1 gene is a target of Stat3 (refs 4-7). Forced overexpression of SSI-1 complementary DNA interfered with IL-6- and LIF-mediated apoptosis and macrophage differentiation of M1 cells, as well as IL-6 induced tyrosine-phosphorylation of a receptor glycoprotein component, gp130, and of Stat3. When SSI-1 is overexpressed in COS7 cells, it can associate with the kinases Jak2 and Tyk2, These findings indicate that SSI-1 is responsible for negative-feedback regulation of the JAK-STAT pathway induced by cytokine stimulation.