The signal transducers and activators of transcription (STAT) transcription factors become phosphorylated on tyrosine and translocate to the nucleus after stimulation of cells with growth factors or cytokines. We show that the Rac1 guanosine triphosphatase can bind to and regulate STAT3 activity. Dominant negative Rac1 inhibited STAT3 activation by growth factors, whereas activated Rac1 stimulated STAT3 phosphorylation on both tyrosine and serine residues. Moreover, activated Rac1 formed a complex with STAT3 in mammalian cells. Yeast two-hybrid analysis indicated that STAT3 binds directly to active but not inactive Rac1 and that the interaction occurs via the effector domain. Rac1 may serve as an alternate mechanism for targeting STAT3 to tyrosine kinase signaling complexes.