Hematopoietic cell development and function is dependent on cytokines and on intercellular interactions with the microenvironment. Although the intracellular signaling pathways stimulated by cytokine receptors are well described, little is known about the mechanisms through which these pathways modulate hematopoietic cell adhesion events in the microenvironment. Here we show that cytokine-activated Stat3 stimulates the expression and function of cell surface adhesion molecules in the myeloid progenitor cell line 32D. We generated an erythropoietin receptor (EpoR) isoform (ER343/401-S3) that activates Stat3 rather than Stat5 by substituting the Stat3 binding/activation sequence motif from gp130 for the sequences surrounding tyrosines 343 and 401 in the receptor cytoplasmic region. Activation of Stat3 leads to homotypic cell aggregation, increased expression of intercellular adhesion molecule 1 (ICAM-1), CD18, and CD11b, and activation of signaling through CD18-containing integrins. Unlike the wild type EpoR, ER343/401-S3 is unable to support long term Epo-dependent proliferation in 32D cells. Instead, Epotreated ER343/401-S3 cells undergo G1 arrest and express elevated levels of the cyclin-dependent kinase inhibitor p27(Kip1). Sustained activation of Stat3 in these cells is required for their altered morphology and growth properties since constitutive SOCS3 expression abrogates homotypic cell aggregation, signaling through CD18-containing integrins, G1 arrest, and accumulation of p27(Kip1). Collectively, our results demonstrate that cytokine-activated Stat3 stimulates the expression and function of cell surface adhesion molecules, indicating that a role for Stat3 is to regulate intercellular contracts in myeloid cells.