Protein tyrosine phosphatase (PTP) receptor T (PTPRT) is the most frequently mutated PTP in human cancers. However, the cell signaling pathways regulated by PTPRT have not yet been elucidated. Here, we report identification of signal transducer and activator of transcription 3 (STAT3) as a substrate of PTPRT. Phosphorylation of a tyrosine at amino acid Y705 is essential for the function of STAT3, and PTPRT specifically dephosphorylated STAT3 at this position. Accordingly, overexpression of normal PTPRT in colorectal cancer cells reduced the expression of STAT3 target genes. These studies illuminate a mechanism regulating the STAT3 pathway and suggest that this signaling pathway plays an important role in colorectal tumorigenesis.