The transcription factor Stat1 plays an essential role in responses to interferons (IFNs). Activation of Stat1 is achieved by phosphorylation on Y701 that is followed by nuclear accumulation. For full transcriptional activity and biological function Stat1 must also be phosphorylated on S727. The molecular mechanisms underlying the IFN-induced S727 phosphorylation are incompletely understood. Here, we show that both Stat1 Y701 phosphorylation and nuclear translocation are required for IFN-induced S727 phosphorylation. We further show that Stat1 mutants lacking the ability to stably associate with chromatin are poorly serine-phosphorylated in response to IFN-{gamma}. The S727 phosphorylation of these mutants is restored on IFN-β treatment that induces the formation of the ISGF3 complex (Stat1/Stat2/Irf9) where Irf9 represents the main DNA binding subunit. These findings indicate that Stat1 needs to be assembled into chromatin-associated transcriptional complexes to become S727-phosphorylated and fully biologically active in response to IFNs. This control mechanism, which may be used by other Stat proteins as well, restricts the final activation step to the chromatin-tethered transcription factor.