Signal transducers and activator of transcription 3 (STAT3) is a transcription factor that has been associated with survival, proliferation, chemoresistance, and angiogenesis of tumor cells. Whether the apoptotic, antiproliferative, and antimetastatic effects of guggulsterone (GS), a farnesoid X receptor antagonist, are linked to its ability to suppress STAT3 activation was investigated. We found that the Z but not the E stereoisomer of GS inhibited both constitutive and interleukin-6-induced STAT3 activation in human multiple myeloma cells. The suppression of STAT3 was mediated through the inhibition of activation of protein tyrosine kinases Janus-activated kinase 2 and c-Src. Vanadate treatment reversed the GS-induced down-regulation of STAT3, suggesting the involvement of a protein tyrosine phosphatase. Indeed, we found that GS induced the expression of both the protein and mRNA for tyrosine protein phosphatase SHP-1 that was not due to demethylation of the SHP-1 promoter previously implicated in the epigenetic silencing of SHP-1. Moreover, knockdown of SHP-1 by small interfering RNA suppressed the effect of GS on induction of SHP-1 and on the inhibition of STAT3 activation, thereby implicating SHP-1 in the action of GS. Finally, GS down-regulated the expression of STAT3-regulated antiapoptotic (Bcl-2, Bcl-xL, and Mcl-1), proliferative (cyclin D1), and angiogenic (VEGF) gene products; and this correlated with suppression of proliferation, the accumulation of cells in sub-G(1) phase of cell cycle, and induction of apoptosis. Overall, these results suggest that GS is a novel blocker of STAT3 activation and thus may have a potential in regulation of growth and metastasis of tumor cells.