Signal transducer and activator of transcription 3 (STAT3) is a transcriptional factor that performs a broad spectrum of biological functions in response to various stimuli. However, no specific coactivator that regulates the transcriptional activity of STAT3 has been identified. Here we report that CR6-interacting factor 1 (Crif1) is a specific transcriptional coactivator of STAT3, but not of STAT1 or STAT5a. Crif1 interacts with STAT3 and positively regulates its transcriptional activity. Crif1-/- embryos were lethal around embryonic day 6.5, and manifested developmental arrest accompanied with defective proliferation and massive apoptosis. The expression of STAT3 target genes was markedly reduced in a Crif1-/- blastocyst culture and in Oncostatin M-stimulated Crif1-deficient MEFs. Importantly, the key activities of constitutively active STAT3-C, such as transcription, DNA binding, and cellular transformation, were abolished in the Crif1-null MEFs, suggesting the essential role of Crif1 in the transcriptional activity of STAT3. Our results reveal that Crif1 is a novel and essential transcriptional coactivator of STAT3 that modulates its DNA binding ability, and shed light on the regulation of oncogenic STAT3.