Activation of signal transducer and activator of transcription-3 (Stat3) during cell confluency is related to its regulatory roles in cell growth arrest- or survival-related physiological or developmental processes. We previously demonstrated that this signaling event triggers epithelial dome formation by transcriptional augmentation of sodium hydrogen exchanger-3 (NHE3) expression. However, the detailed molecular mechanism remained unclear. By using serial deletions, site-directed mutagenesis and EMSA analysis, we now demonstrate Stat3 binding to an atypical Stat3-response element in the rat proximal NHE3 promoter, located adjacent to a cluster of Sp cis-elements (SpA/B/C), within -77/-36 nt of the gene. SpB (-58/-55 nt) site was more effective than SpA (-72/-69 nt) site for cooperative binding of Sp1/Sp3. Increasing cell density had no effect on Sp1/Sp3 expression, but resulted in their increased binding to the SpA/B/C probe along with Stat3 and concurrently with enhanced nuclear pTyr⁷⁰⁵-Stat3 level. Immunoprecipitation performed with the nuclear extracts demonstrated physical interaction of Stat3 and Sp1/Sp3 triggered by cell confluency. Stat3 inhibition by overexpression of dominant-negative Stat3-D mutant in MDCK cells or by siRNA-mediated knockdown in Caco-2 cells resulted in inhibition of the cell density-induced NHE3 expression, Sp1/Sp3 binding, NHE3 promoter activity, and in decreased dome formation. Thus, during confluency, ligand-independent Stat3 activation leads to its interaction with Sp1/Sp3, their recruitment to the SpA/B/C cluster in a Stat3 DNA-binding domain dependent fashion, increased transcription and expression of NHE3, to coordinate cell density-mediated epithelial dome formation.