Interferon (IFN)-gamma actions on the vessel wall play an important role in the pathogenesis of arteriosclerosis, yet the contribution of different IFN-gamma signaling pathways to the phenotypic modulation of vascular smooth muscle cells (VSMCs) are poorly understood. We investigated the effects of IFN-gamma on VSMCs and arteries through interactions involving signal transducer and activator of transcription (STAT) proteins. In addition to STAT1 activation, IFN-gamma consistently phosphorylated STAT3 in human VSMCs but weakly or not at all in human endothelial cells or mouse VSMCs. STAT3 activation resulted in nuclear translocation of this transcription factor. By selectively inhibiting STAT3 and not STAT1 signaling, we identified a number of candidate IFN-gamma-inducible, STAT3-dependent gene products by microarray analysis. Results for selected genes, including the pro-apoptotic molecules X-linked inhibitor of apoptosis associated factor-1 (XAF1) and Noxa, were verified by real time quantitative reverse transcription-PCR and immunoblot analyses. IFN-gamma-induced STAT3 and STAT1 signaling in VSMCs demonstrated reciprocal inhibition. STAT3 activation by IFN-gamma sensitized VSMCs to apoptosis triggered by both death receptor- and mitochondrial-mediated pathways. Knock down of XAF1 and Noxa expression inhibited the priming of VSMCs to apoptotic stimuli by IFN-gamma. Finally, we confirmed the in vivo relevance of our observations using a chimeric animal model of immunodeficient mice bearing human coronary artery grafts in which the expression of XAF1 and Noxa as well as the pro-apoptotic effects induced by IFN-gamma were dependent on STAT3. The data suggest STAT1-independent signaling by IFN-gamma via STAT3 that promotes the death of human VSMCs.