The STAT1 transcription factor is organized into several highly conserved domains, each of which has been assigned a function with the exception of the linker domain. We previously characterized a mutant in the linker domain of STAT1 that gave normal DNA binding using a standard probe in an electrophoretic mobility assay but failed to activate transcription in response to interferon gamma. We now report the mechanistic basis for the inactivity of this STAT1(K544A/E545A) mutant. Rather than failing to attract transcriptional coactivators, the STAT1(K544A/E545A) mutant has a subtle biophysical defect, which prevents accumulation of the activated protein on chromatin in vivo: the mutant has comparable K(d) with greatly increased k(off) for DNA binding. The increase in both on-rate and off-rate of DNA binding results in a substantially reduced residence time of STAT1(K544A/E545A) on STAT binding sites. We find a similar correlation between off-rate and transcriptional potency for STAT1(N460A), which bears a mutation in the DNA binding domain. These results yield insight into the rate of complex assembly involving STAT1 that leads to transcriptional stimulation.