STAT3 protein has an important role in oncogenesis and is a promising anticancer target. Herein, we demonstrate that a novel small molecule fluacrypyrim (FAPM) inhibits the growth of leukemia cells by a predominant G1 arrest with significant decrease of the protein and mRNA levels of cyclin D1. As cyclin D1 is transcriptionally regulated by STAT3, FAPM is then shown to markedly inhibit the STAT3 phosphorylation with marginal effect on the other signal transducers and activators of transcription, and without effect on phosphoinositide-3-kinase and mitogen-activated protein kinase pathways. Further analysis shows that FAPM significantly increases the protein tyrosine phosphatases (PTPs) activity in a dose-dependent manner, and the inhibition of PTP activation by sodium pervanadate reverses FAPM-induced suppression of STAT3 tyrosine phosphorylation, indicating an important role of PTP in the action of FAPM. Finally, FAPM treatment results in selective suppression of STAT3-mediated transcriptional activity and its downstream effectors, and subsequent induction of growth arrest and apoptosis in STAT3-dependent cancer cell lines. This study therefore identifies FAPM as a potent STAT3 activation inhibitor with possible therapeutic potential against malignancies with constitutive STAT3 activation.