Signal transducers and activators of transcription (STAT) are a highly conserved family of transcription factors that are activated by phosphorylation in the cytoplasm, after which they translocate to the nucleus to regulate gene expression. Among the seven STATs, STAT3 is of particular interest due to its constitutive phosphorylation in a large proportion of human cancers and its ability to induce neoplastic transformation. Inhibition of STAT3 can reverse tumor growth in experimental systems while having few effects in normal cells. These findings have implicated STAT3 as a potentially important target for therapeutic intervention. In addition to its well-described role as a transcription factor, STAT3 has been found recently to have important effects in the cytoplasm. Collectively, these functions of STAT3 directly contribute to tumorigenesis, invasion, and metastasis. Given the potential importance of STAT3 as a target for cancer therapy, molecules have been developed that can block STAT3 function at a variety of steps. These drugs show promise as anticancer agents in model systems of a variety of common human cancers. Thus, elucidating the functions of STAT3 and developing agents to inhibit this protein remain important scientific and clinical challenges.