Cytokines play an important role in creating an inflammatory microenvironment, which is now considered a hallmark of cancer. Although tumor cells can exploit cytokine signaling to promote growth, invasion, and metastasis, the response of normal and premalignant epithelial cells to cytokines present in a developing tumor microenvironment remains unclear. Oncostatin M (OSM), an IL-6 family cytokine responsible for STAT3 activation, has been implicated in cancer development, progression, invasion, and metastasis. Paradoxically, OSM can also suppress the growth of normal cells and certain tumor-derived cell lines. Using isogenic human mammary epithelial cells (HMEC) at different stages of neoplastic transformation, we found that OSM signaling suppressed c-MYC expression and engaged a p16- and p53-independent growth arrest that required STAT3 activity. Inhibition of STAT3 activation by expressing a dominant-negative STAT3 protein or a STAT3-shRNA prevented the OSM-mediated arrest. In addition, expression of c-MYC from a constitutive promoter also abrogated the STAT3-mediated arrest, and strikingly, cooperated with OSM to promote anchorage-independent growth (AIG), a property associated with malignant transformation. Cooperative transformation by c-MYC and OSM required PI3K and AKT signaling, showing the importance of multiple signaling pathways downstream of the OSM receptor in defining the cellular response to cytokines. These findings identify c-MYC as an important molecular switch that alters the cellular response to OSM-mediated signaling from tumor suppressive to tumor promoting. Cancer Res; 71(22); 6930–9. ©2011 AACR.