We have recently shown that Src induces the formation of podosomes and cell invasion by suppressing endogenous p53, while enhanced p53 strongly represses the Src-induced invasive phenotype. However, the mechanism by which Src and p53 play antagonistic roles in cell invasion is unknown. Here we show that the Stat3 oncogene is a required downstream effector of Src in inducing podosome structures and related invasive phenotypes. Stat3 promotes Src phenotypes through the suppression of p53 and the p53-inducible protein caldesmon, a known podosome antagonist. In contrast, enhanced p53 attenuates Stat3 function and Src-induced podosome formation by upregulating the tumor suppressor PTEN. PTEN, through the inactivation of Src/Stat3 function, also stabilizes the podosome-antagonizing p53/caldesmon axis, thereby further enhancing the anti-invasive potential of the cell. Furthermore, the protein phosphatase activity of PTEN plays a major role in the negative regulation of the Src/Stat3 pathway and represses podosome formation. Our data suggest that cellular invasiveness is dependent on the balance between two opposing forces: the proinvasive oncogenes Src-Stat3 and the anti-invasive tumor suppressors p53-PTEN.