Interleukin-6 (IL-6) induces tyrosine phosphorylation and activation of the latent transcription factor Stat3 in HepG2 cells. Mutation of Stat3 tyrosine 705 to phenylalanine (Y705F) inhibits IL-6-induced tyrosine phosphorylation of this Stat3 mutant in transfected HepG2 cells. In cotransfections of HepG2 cells, the Stat3 mutant Y705F causes a reduction of the tyrosine phosphorylation of wild type Stat3-FLAG. Moreover, Y705F inhibits the action of endogenous Stat3 in cotransfected cells, reducing IL-6 induction of a Stat3-responsive reporter construct. Y705F therefore acts as a dominant negative mutation of Stat3.