Cell proliferation has generally been considered dispensable for anteroposterior extension of embryonic axis during vertebrate gastrulation. Signal transducer and activator of transcription 3 (Stat3), a conserved controller of cell proliferation, survival and regeneration, is associated with human scoliosis, cancer and Hyper IgE Syndrome. Zebrafish Stat3 was proposed to govern convergence and extension gastrulation movements in part by promoting Wnt/Planar Cell Polarity (PCP) signaling, a conserved regulator of mediolaterally polarized cell behaviors. Here, using zebrafish stat3 null mutants and pharmacological tools, we demonstrate that cell proliferation contributes to anteroposterior embryonic axis extension. Zebrafish embryos lacking maternal and zygotic Stat3 expression exhibit normal convergence movements and planar cell polarity signaling, but transient axis elongation defect due to insufficient number of cells resulting largely from reduced cell proliferation and increased apoptosis. Pharmacologic inhibition of cell proliferation during gastrulation phenocopied axis elongation defects. Stat3 regulates cell proliferation and axis extension in part via upregulation of Cdc25a expression during oogenesis. Accordingly, restoring Cdc25a expression in stat3 mutants partially suppressed cell proliferation and gastrulation defects. During later development, stat3 mutant zebrafish exhibit stunted growth, scoliosis, excessive inflammation, and fail to thrive, affording a genetic tool to study Stat3 function in vertebrate development, regeneration, and disease.