Aberrantly activated signal transducer and activator of transcription 3 (Stat3) is implicated in the development of various human cancers. Y705 phosphorylation is conventionally thought to be required for Stat3 signal-dependent activation and seems to play an essential role in some malignancies. Recently, it was shown that Stat3 is activated through novel and noncanonical mechanisms, including phosphorylation at S727. Here, we investigate S727 phosphorylation of Stat3 and its subsequent effects in prostate cancer development, independent of Y705 phosphorylation, using mutated Stat3 in the human prostate cancer cell line LNCaP. We show mutation of S727 to the phosphomimetic residue Glu, and inactivation of Y705 (Y705F/S727E) resulted in a remarkable growth advantage in low-serum, enhanced anchorage-independent growth in soft agar, and increased tumorigenicity in nonobese diabetic/severe combined immunodeficient (NOD/SCID) mice, possibly by direct activation of downstream proto-oncogenes c-myc, mcl-1, and survivin. Y705F/S727E mutant cells were more invasive than Y705F/S727A (inactivation of Y705 and S727) mutant cells, and more Y705F/S727E mutant Stat3 was localized in the nuclei relative to Y705F/S727A mutant Stat3 at the steady state. Furthermore, the Y705F/S727E but not the Y705F/S727A mutant induced anchorage-independent growth of noncancerous prostate epithelial cells (RWPE-1). We further show that Stat3 is phosphorylated at S727 in 65% of malignant prostate tissues (n = 20) relative to 25% of normal prostate tissues (n = 4). Moreover, there is a positive correlation between phosphoS727-Stat3 expression and Gleason score in these prostate cancer tissues (P = 0.05). Our data suggest for the first time that S727 phosphorylation is sufficient to activate Stat3, thereby driving prostate tumorigenesis independent of Y705 phosphorylation. [Cancer Res 2008;68(19):7736–41]