Background/Objectives: Maintenance of cellular function in culture is vital for transfer and development following adoptive immunotherapy. Dual properties of IL-21 in activating T cells and reducing activation induced cell death led us to explore the mechanism of action of IL-21 enhanced proliferation and cytotoxic potential of CIK cells. Method: CIK cells cultured from PBMCs of healthy subjects were stimulated with IL-21 and cellular viability and cytotoxicity to K562 cells were measured. To elucidate the mechanism of action of IL-21, mRNA expression of cytotoxic factors was assessed by RT-PCR and protein expression of significantly important cytotoxic factors and cytokine secretion were determined through flow cytometry and ELISA. Western blotting was performed to check the involvement of the JAK/STAT pathway following stimulation. Results: We found that IL-21 did not enhance in vitro proliferation of CIK cells, but did increase the number of cells expressing the CD3+/CD56+ phenotype. Cytotoxic potential was increased with corresponding increase in perforin ($0.9831{pm}0.1265$ to $0.7592{pm}0.1457$), granzyme B ($0.4084{pm}0.1589$ to $0.7319{pm}0.1639$) and FasL ($0.4015{pm}0.2842$ to $0.7381{pm}0.2568$). Interferon gamma and TNF-alpha were noted to increase ($25.8{pm}6.1ng/L$ to $56.0{pm}2.3ng/L$; and $5.64{pm}0.61{mu}g/L$ to $15.14{pm}0.93{mu}g/L$, respectively) while no significant differences were observed in the expression of granzyme A, TNF-alpha and NKG2D, and NKG2D. We further affirmed that IL-21 signals through the STAT-3 and STAT-5b signaling pathway in the CIK cell pool. Conclusion: IL-21 enhances cytotoxic potential of CIK cells through increasing expression of perforin, granzyme B, IFN-gamma and TNF-alpha. The effect is brought about by the activation of STAT-3 and STAT-5b proteins.