UT-7 is a human megakaryoblastic leukemia cell line with absolute dependence on interleukin-3, granulocyte-macrophage colony-stimulating factor (GM-CSF), or erythropoietin (EPO) for growth and survival. Among its sublines, UT-7/GM, which remains undifferentiated in the presence of GM-CSF, has a bipotency showing differentiation into erythroid or megakaryocytic cell lineages in the presence of EPO or thrombopoietin (TPO), respectively. To investigate the mechanism underlying determination of cell differentiation, we investigated the role of signal transducers and activators of transcription (STAT) in EPO-induced erythroid differentiation. UT-7 cells grow in response to GM-CSF and EPO but do not differentiate into mature cells. UT-7/GM cells grow in response to GM-CSF and differentiate into erythroid cells by EPO. In UT-7 cells, both GM-CSF and EPO induced the activation of Stat1 alpha, Stat3 and Stat5. In UT-7/GM cells, EPO activated Stat5 alone, although the activation of Stat1 alpha, Stat3, and Stat5 was induced by GM-CSF or TPO. In addition, GM-CSF inhibited EPO-induced erythroid differentiation and concomitantly activated Stat1 alpha and Stat3 in UT-7/GM cells even in the presence of EPO. Further we transfected Stat1 alpha, Stat3 cDNA or both into UT-7/GM cells. Hemoglobin-positive cells were decreased in the stable transfectants stimulated with EPO. These results indicate that Stat1 alpha and Stat3 have an inhibitory effect on the EPO-induced erythroid differentiation, and more complicated combination of transcription factors may play an important role in the decision of cell differentiation.