Hematopoietic progenitor cells from Fanconi anemia (FA) group C (FA-C) patients display hypersensitivity to the apoptotic effects of gamma interferon (IFN-γ) and constitutively express a variety of IFN-dependent genes. Paradoxically, however, STAT1 activation is suppressed in IFN-stimulated FA cells, an abnormality corrected by transduction of normal FANCC cDNA. We therefore sought to define the specific role of FANCC protein in signal transduction through receptors that activate STAT1. Expression and phosphorylation of IFN-γ receptor α chain (IFN-γRα) and JAK1 and JAK2 tyrosine kinases were equivalent in both normal and FA-C cells. However, in coimmunoprecipitation experiments STAT1 did not dock at the IFN-γR of FA-C cells, an abnormality corrected by transduction of the FANCC gene. In addition, glutathione S-transferase fusion genes encoding normal FANCC but not a mutant FANCC bearing an inactivating point mutation (L554P) bound to STAT1 in lysates of IFN-γ-stimulated B cells and IFN-, granulocyte-macrophage colony-stimulating factor-and stem cell factor-stimulated MO7e cells. Kinetic studies revealed that the initial binding of FANCC was to nonphosphorylated STAT1 but that subsequently the complex moved to the receptor docking site, at which point STAT1 became phosphorylated. The STAT1 phosphorylation defect in FA-C cells was functionally significant in that IFN induction of IFN response factor 1 was suppressed and STAT1-DNA complexes were not detected in nuclear extracts of FA-C cells. We also determined that the IFN-γ hypersensitivity of FA-C hematopoietic progenitor cells does not derive from STAT1 activation defects because granulocyte-macrophage CFU and erythroid burst-forming units from STAT1−/− mice were resistant to IFN-γ. However, BFU-E responses to SCF and erythropoietin were suppressed in STAT−/− mice. Consequently, because the FANCC protein is involved in the activation of STAT1 through receptors for at least three hematopoietic growth and survival factor molecules, we reason that FA-C hematopoietic cells are excessively apoptotic because of an imbalance between survival cues (owing to a failure of STAT1 activation in FA-C cells) and apoptotic and mitogenic inhibitory cues (constitutively activated in FA-C cells in a STAT1-independent fashion).