As do cytokine receptors and receptor tyrosine kinases, G protein-coupled receptors (GPCRs) signal to Janus kinases (Jaks) and signal transducers and activators of transcription (STATs). However, the early biochemical events linking GPCRs to this signaling pathway have been unclear. Here we show that GPCR-stimulated Rac activity and the subsequent generation of reactive oxygen species are necessary for activating tyrosine phosphorylation of Jaks and STAT-dependent transcription. The requirement for Rac activity can be overcome by addition of hydrogen peroxide. Expression of activated mutants of Rac1 is sufficient to activate Jak2 and STAT-dependent transcription, and the activation of Jak2 correlates with the ability of Rac1 to bind to NADPH oxidase subunit p67^phox. We further show that GPCR agonists stimulate tyrosine phosphorylation of STAT1 and STAT3 proteins in a Rac-dependent manner. The tyrosine phosphorylation of STAT3 is biphasic; the first peak of phosphorylation is weak and correlates with rapid activation of Jaks by GPCRs, whereas the second peak is stronger and requires the synthesis of an autocrine factor. Rho also plays an essential role in the induction of STAT transcriptional activity. Our results highlight a novel role for Rho GTPases in mediating the regulatory effects of GPCRs on STAT-dependent gene expression.