STAT1, which carries tumor suppressor functions in several models, consists of two isoforms, namely STAT1α and STAT1β. The biological function and significance of STAT1β has never been examined in human cancer. We examined STAT1β function in esophageal squamous cell carcinoma (ESCC) by transfecting a STAT1β gene into various ESCC cell lines. The interaction between STAT1α and STAT1β was examined by using co-immunoprecipitation and confocal microscopy. The prognostic significance of STAT1β expression, detectable by immunohistochemistry and western blot, was evaluated in a large cohort of ESCC patients. Enforced expression of STAT1β induced and prolonged the expression and phosphorylation of STAT1α in ESCC cells, and these effects were amplified by gamma-interferon (IFN-γ). We also found that STAT1β interacts with STAT1α and decreases STAT1α degradation by the proteasome. Moreover, STAT1β substantially increased the DNA binding and transcription activity of STAT1. STAT1β also sensitized ESCC cells to chemotherapeutic agents, including cisplatin and 5-flurouracil. Using western blot and immunohistochemistry, we found that STAT1β was frequently decreased in esophageal cancer, as compared to their adjacent benign esophageal epithelial tissue. Loss of STAT1β significantly correlated with lymph node metastasis, invasion and shorter overall survival in ESCC patients. Therefore, STAT1β plays a key role in enhancing the tumor suppressor function of STAT1α, in ESCC, in a manner that can be amplified by IFN-γ.