The JAK/STAT signal transduction pathway regulates many developmental processes in Drosophila. However, the functional mechanism of this pathway is poorly understood. In this report, we identify the Drosophila cyclin-dependent kinase 4 (Cdk4), which exhibits embryonic mutant phenotypes identical to those in the Hopscotch/JAK kinase and stat92E/STAT mutations. Specific genetic interactions between Cdk4 and hop mutations suggest that Cdk4 functions downstream of the HOP tyrosine kinase. We further show that Cyclin D-Cdk4 (as well as Cyclin E-Cdk2) binds and regulates STAT92E protein stability. STAT92E regulates gene expression for various biological processes, including the endocycle S phase. These data suggest that Cyclin D-Cdk4 and Cyclin E-Cdk2 play more versatile roles in Drosophila development.