Signal transducer and activator of transcription 3 (STAT3) is the main mediator of interleukin 6 (IL-6)-type cytokine signaling. It exists in two isoforms: the full-length STAT3 alpha and the truncated STAT3 beta, generally thought to act as a dominant negative factor. To assess their relative functions, we ablated the expression of either isoform by gene targeting. We show here that in vivo STAT3 beta is not a dominant negative factor. Its expression can rescue the embryonic lethality of a STAT3-null mutation and it can by itself induce the expression of specific STAT3 target genes. Nevertheless, STAT3 alpha has nonredundant roles such as modulation of cellular responses to IL-6 and mediation of IL-10 function in macrophages.