Upon binding of gamma interferon (IFN-gamma) to its receptor, the latent transcription factor Stat1 becomes phosphorylated, dimerizes, and enters the nucleus to activate transcription. In response to IFN-alpha, Stat1 binds to Stat2 in a heterodimer that recruits p48, an IRF family member, to activate transcription. A number of functional domains of the STATs, including a C-terminal transactivation domain, a dimerization domain, and an SH2 domain, are known. However, the highly conserved residues between the DNA binding and SH2 domains (463 to 566), recently christened the linker domain on the basis of crystallographic studies, have remained without a known function. In the present study, we report that KE544-545AA point mutants in Stat1 abolish transcriptional responses to IFN-gamma but not to IFN-alpha. We further show that this mutant Stat1 undergoes normal phosphorylation, nuclear translocation, and DNA binding. Taken together with recent structural evidence, these results suggest that the linker domain acts as a critical contact point during the construction of a Stat1-driven transcriptional complex.