Signal transducers and activators of transcription (STATs) comprise a unique family of transcription factors, which transmit the interactions of cytokines, hormones and growth factors with their cell surface receptors into transcriptional programs. The mechanism of STAT activation has been well-established and comprises tyrosine phosphorylation, dimerization, nuclear translocation, binding to specific DNA response elements, recruitment of co-activators or co-repressors and transcriptional induction or repression of target genes. Gene deletion, microarrays, proteomics and chromatin immunoprecipitation experiments have revealed target genes with a broad range of functions regulated by STAT3 and STAT5. In the mammary gland, STAT5-induced genes contribute mainly to the prolactin dependent lobulo-alveolar development, whereas STAT3 induced genes control apoptosis during involution. Crucial effects have also been observed in other tissues. The germ line deletion of STAT3 or STAT5 causes early embryonal or perinatal lethality in mice. STAT5 is also required for proliferation of T- and B-cells and hematopoietic stem cell self-renewal. Deregulated STAT activity is often found associated with tumorigenesis and activated STATs seem to be limiting components in tumor cells. This review summarizes the functions of STAT3 and STAT5 in different cell types and the strategies that are used to counteract their action in tumor cells.