In response to IFN-gamma, the latent cytoplasmic protein signal transducers and activators of transcription 1 (Stat1) becomes phosphorylated on Y701, dimerizes, and accumulates in the nucleus to activate transcription of IFN-gamma-responsive genes. For maximal gene activation, S727 in the transcription activation domain of Stat1 also is inducibly phosphorylated by IFN-gamma. We previously purified a group of nuclear proteins that interact specifically with the Stat1 transcription activation domain. In this report, we identified one of them as the multifunctional Ca(2+)/calmodulin-dependent kinase (CaMK) II. We demonstrate that IFN-gamma mobilizes a Ca(2+) flux in cells and activates CaMKII. CaMKII can interact directly with Stat1 and phosphorylate Stat1 on S727 in vitro. Inhibition of Ca(2+) flux or CaMKII results in a lack of S727 phosphorylation and Stat1-dependent gene activation, suggesting in vivo phosphorylation of Stat1 S727 by CaMKII. Thus two different cellular signaling events, IFN-gamma receptor occupation and Ca(2+) flux, are required for Stat1 to achieve maximal transcriptional activation through regulation of phosphorylation.