Interleukin-6 (IL-6) induces growth arrest and macrophage differentiation through its receptor in a murine myeloid leukaemic cell line, M1, although it is largely unknown how the IL-6 receptor generates these signals. By using chimeric receptors consisting of the extracellular domain of growth hormone receptor and the transmembrane and cytoplasmic domain of gp130 with progressive C-terminal truncations, we showed that the membrane-proximal 133, but not 108, amino acids of gp130 could generate the signals for growth arrest, macrophage differentiation, down-regulation of c-myc and c-myb, induction of junB and IRF1 and Stat3 activation. Mutational analysis of this region showed that the tyrosine residue with the YXXQ motif was critical not only for Stat3 activation but also for growth arrest and differentiation, accompanied by down-regulation of c-myc and c-myb and immediate early induction of junB and IRF1. The tight correlation between Stat3 activation and other IL-6 functions was further observed in the context of the full-length cytoplasmic region of gp130. The result suggest that Stat3 plays an essential role in the signals for growth arrest and differentiation.