As the expression of cyclin D1 is induced during liver regeneration and also in hepatic tumor cells, cyclin D1 is likely to play an important role in the proliferation and transformation of hepatocytes. However, the role of cyclin D1 in liver development remains unknown. Here we show that the expression of D-type cyclins including cyclin D1, D2, and D3 is down-regulated along with liver development. In addition, oncostatin M (OSM), an interleukin-6 family cytokine, down-regulated the expression of cyclin D1 and D2 in a primary culture of fetal hepatocytes in which OSM induces hepatic differentiation. Ectopic expression of receptor mutants defective in the activation of either STAT3 or SHP-2/Ras indicated that the down-regulation of D1 and D2 cyclins by OSM was mediated by STAT3 but not by SHP-2/Ras. Consistently, expression of dominant negative STAT3 but not Ras relieved OSM-induced suppression of cyclin D expression. Activation of STAT3 in fetal hepatocytes of transgenic mice expressing the STAT3-estrogen receptor fusion protein by 4-hydroxytamoxifen resulted in the suppression of cyclin D1 and D2 expression. These results indicate that STAT3 activation is necessary and sufficient for down-regulation of D1 and D2 cyclins in fetal hepatocytes. Furthermore, STAT3-C, a constitutively active form of STAT3, suppressed transcription of the cyclin D1 promoter in fetal hepatocytes, whereas it activated the transcription in hepatic tumor cells, huH7 and HepG2. Thus, STAT3-mediated down-regulation of cyclin D expression is rather specific to fetal hepatocytes that are undergoing maturation processes including a reduction of their proliferation potential.