STAT1 is a key component of Interferon (IFN)-gamma and IFN-alpha signaling and mediates protection against mycobacteria, fungal, viral infections, and cancer. Dominant negative inhibitory as well as gain of function heterozygous STAT1 mutations demonstrate that IFN-gamma driven cellular responses need to be tightly regulated to control infections. We describe an autosomal dominant mutation in the SH2 domain of STAT1 that disrupts protein phosphorylation, c.1961T > A (M654K). The mutant allele does not permit STAT1 phosphorylation, and impairs STAT1 phosphorylation of the wild type allele. Protein dimerization is preserved but DNA binding activity, IFN-gamma driven GAS-luciferase activity, and expression of IFN-gamma target genes are reduced. IFN-alpha driven ISRE response, but not IFN-alpha driven GAS response, are preserved when cells are co-transfected with wild type and the mutant STAT1 constructs. M654K exerts a dominant negative effect on IFN-gamma related immunity and is recessive for IFN-alpha induced immune function.