Mounting clinical data suggest that high telomerase activity is tightly associated with cancer progression and poor outcomes. Constitutively activated STAT3 is found in ∼60% of human malignancies and shows a dismal prognosis. We previously reported that activated STAT3 promoted epithelial-mesenchymal transition (EMT) and cancer stem cell phenotype in human breast cancer. However, little is known how STAT3 is regulated in the cancer stem cell and by which mechanisms STAT3 contributes to poor prognosis in aggressive breast cancer. Here we demonstrate that STAT3 physically interacts with CD44 and NF-kB and activates the catalytic subunit of telomerase (hTERT) in human breast cancer stem cells. STAT3 plays a role as a signal transducing molecule between CD44 and NF-kB. In addition to functioning as a catalytic subunit of telomerase, hTERT has been reported to function as a transcription co-factor which drives EMT and cancer stem cell phenotype in human cancer. We observed that activated hTERT increases CD44 (+) subpopulation, whereas targeted knock-down of hTERT abolished cancer stem cell phenotype. Targeted STAT3 knock-down cells also down-regulated hTERT and decreased CD44 subpopulation. Finally, CD44 knock-down resulted in the abrogation of cancer stem cell phenotype and concurrent down-regulation of pSTAT3 and hTERT. Our study delineates the signaling pathway where STAT3 functions as a modulator for CD44 and hTERT, promoting a cancer stem cell phenotype. The constitutive activation of STAT3 signaling that leads to regulation of hTERT pathway may provide novel therapeutic targets for human breast cancer stem cells.