Interferon (IFN) induction of immediate-early response genes is mediated through the signal transducers and activators of transcription (STATs). Activation of STAT1 by IFNalpha or IFNgamma through its tyrosine phosphorylation involves members of the Jak tyrosine kinases. In addition, STAT2 is activated by IFNalpha, and, together with STAT1 and p48/ISGF3gamma, forms the transcription factor complex ISGF3. Previous findings suggested that the STAT1-SH2 domain, which is required for the homo- or heterodimerization of STAT1, also participates in the recruitment of STAT1 to the IFN-receptors, because mutations in the SH2-domain abolished STAT1 activation by IFNgamma. Furthermore, STAT2 was reported to be required for the activation of STAT1 by IFNalpha. We were able to induce STAT1 tyrosine phosphorylation by IFNalpha/beta in the absence of STAT2 or a functional STAT1-SH2 domain. In contrast, IFNgamma was unable to cause tyrosine phosphorylation of STAT1-(SH2:Arg --> Gln). Interestingly, although STAT1 was found in the nucleus in STAT2-deficient cells, the nuclear accumulation of the tyrosine phosphorylated SH2-mutant STAT1 was impaired. In summary, our results indicate that the SH2 domain of STAT1 is not required for its ligand-dependent activation by IFNalpha/beta. Moreover, tyrosine phosphorylation is not sufficient to target STAT1 to the nucleus; rather, dimerization appears to play a critical role in the subcellular distribution of STAT1.