The 89-kDa STAT3 protein is a latent transcription factor which is activated in response to cytokines (interleukin (IL)-5 and -6) and growth factors (epidermal growth factor). Binding of IL-5 to its specific receptor activates JAK2 which leads to the tyrosine phosphorylation of STAT3 proteins. Here we report the cloning of a cDNA encoding a variant of the transcription factor STAT3 (named STAT3beta) which was isolated by screening an eosinophil cDNA library. Compared to wild-type STAT3, STAT3beta lacks an internal domain of 50 base pairs located near the C terminus. This splice product is a naturally occurring isoform of STAT3 and encodes a 80-kDa protein. We found by reconstitution of the human IL-5R in COS cells that like STAT3, STAT3beta is phosphorylated on tyrosine and binds to the pIRE from the ICAM-1 promoter after IL-5 stimulation. However, STAT3beta fails to activate a pIRE containing promoter in transient transfection assays. Instead, co-expression of STAT3beta inhibits the transactivation potential of STAT3. These results suggests that STAT3beta functions as a negative regulator of transcription.