Mouse embryonic stem (ES) cells can be propagated in vitro while retaining their properties of pluripotency and self-renewal under the continuous presence of leukemia inhibitor factor (LIF). An essential role has been attributed to subsequent activation of the Stat3 transcription factor in mediating LIF self-renewal response. To date, however, downstream target genes of Stat3 in ES cells are still unknown. To isolate these genes, we performed a microarray-based kinetic comparison of LIF-stimulated (undifferentiated) ES cells versus ES cells induced to differentiate by shutting down Stat3 activity through either LIF deprivation or, more specifically, expression of a Stat3 dominant-negative mutant. In each case, we chose the earliest time at which ES cells lose their self-renewal properties, as illustrated by a decrease in the number of embryoid bodies and blast cell colony formation as well as germ layer marker expression. Comparison of the two independent approaches revealed similarly regulated genes that are likely to be involved in the Stat3 effects on ES cell self-renewal. For instance, upregulation of growth factors such as the transforming growth factor-β relative Lefty1 or transcriptional regulators such as Id1 and Id2 and down-regulation of the groucho-like protein Aes1 (grg5) were found. Promoter analysis of the aes1 gene revealed three functional Stat3 consensus sites, as shown by luciferase assays. Furthermore, chromatin immunoprecipitation experiment demonstrated that Stat3 is recruited to the promoter of aes1 in ES cells. These data demonstrated that the aes1 gene is a direct transcriptional target of Stat3 in ES cells.