STAT3 regulates many target genes in response to cytokines and growth factors. To study the mechanisms of STAT3-dependent transcription, we established several cell lines in which HepG2-STAT3-knockdown cells were reconstituted with a variety of STAT3 mutants. Using these cell lines, we found that truncated STAT3(1-750), but not STAT3(1-761), could not recruit SRC-1/NcoA-1 and was not hosphorylated on Ser727. Furthermore, mutation of STAT3 L755 and F757 to alanines caused the loss of STAT3-dependent SRC-1 recruitment, leaving Ser727 phosphorylation intact. Consistent with this, the STAT3-L755A/F757A mutant showed no increase in acetylated historic H3 at Lys14 and a decreased level of RNA polymerase II recruited to the target gene promoter, although p300 recruitment and historic H4 acetylation were intact. This mutant also lost responsiveness to co-expressed SRC-1. Thus, the conserved STAT3 region from 752 to 761, called STAT3 CR2, plays critical roles in STAT3-dependent transcription by recruiting SRC-1 and allowing Ser727 phosphorylation. (C) 2004 Elsevier Inc. All riahts reserved.