We previously demonstrated that engagement of cadherins, cell to cell adhesion molecules, triggers a dramatic increase in levels and activity of the Rac/Cdc42 small GTPases, which is followed by secretion of IL6 family cytokines and activation of their common receptor, gp130, in an autocrine manner. This results in phosphorylation of the Signal Transducer and Activator of Transcription-3 (Stat3) on tyrosine-705, which then dimerizes, migrates to the nucleus, and activates transcription of genes involved in cell division and survival. In the present report we demonstrate that, in mouse Balb/c3T3 fibroblasts, mutationally activated Src527F also increases Rac levels, leading to secretion of IL6 family cytokines and gp130 activation, which triggers the Stat3-ptyr705 increase. Interestingly, our results also demonstrate that cadherin-11 is required to preserve gp130 levels for IL6 family signaling. At the same time, however, activated Src527F downregulates cadherin-11, in a quantitative manner. As a result, Src527F expression to intermediate levels allows sufficient cadherin-11, hence gp130 levels for Stat3 activation, as expected. However, expressed to high levels, Src527F eliminates cadherin-11, hence gp130 signaling, thus abolishing Stat3-ptyr705 stimulation. Taken together, these data establish for the first time a loop between Src, cadherin-11, gp130, and Stat3 activation. This fine balance between Src527F and cadherin-11 levels which is required for Stat3 activation and cellular survival could have significant therapeutic implications.