STAT transcription factors have been implicated in many biological processes, particularly host immune defense and development. Here we characterize a STAT orthologue from the nematode, C. elegans. We show that this protein, termed STA-1, is structurally and functionally related to other vertebrate and invertebrate STAT proteins, recognizing a cis DNA element conserved through phylogeny. Unexpectedly, STA-1 lacks the conserved amino-terminal oligomerization domain found in vertebrate and other invertebrate STAT proteins, a feature also lacking in orthologues from a distantly related nematode species and from the slime mold, Dictyostelium discoideum. This absence suggests that a primordial STAT protein lacked this domain, which was accreted later in evolution to provide further regulatory control of STAT signaling. Derivation of null mutants demonstrated that STA-1 is not required for nematode viability, despite its widespread expression in multiple tissues of the worm. However, mutant STA-1 proteins that lack functional coiled-coil and DNA binding domains could still be activated and accumulated in the nucleus, suggesting that DNA binding is not a necessary prerequisite for nuclear retention of activated STAT proteins. Our results shed new light on the evolution and function of the STAT signaling pathway and on the structural requirements for STAT activation.