Signal transducer and activator of transcription 3 (Stat3) is a key regulator of gene expression in response to signaling of the glycoprotein 130 (gp130) family cytokines, including interleukin 6, oncostatin M, and leukemia inhibitory factor. Many efforts have been made to identify Stat3 target genes and to understand the mechanism of how Stat3 regulates gene expression. Using the microarray technique, hundreds of genes have been documented to be potential Stat3 target genes in different cell types. However, only a small fraction of these genes have been proven to be true direct Stat3 target genes. Here we report the identification of novel direct Stat3 target genes using a genome-wide screening procedure based on the chromatin immunoprecipitation method. These novel Stat3 target genes are involved in a diverse array of biological processes such as oncogenesis, cell growth, and differentiation. We show that Stat3 can act as both a repressor and activator on its direct target genes. We further show that most of the novel Stat3 direct target genes are dependent on Stat3 for their transcriptional regulation. In addition, using a physiological cell system, we demonstrate that Stat3 is required for the transcriptional regulation of two of the newly identified direct Stat3 target genes important for muscle differentiation.