Epidermal Growth Factor Receptor (EGFR) targeting in nonsmall cell lung cancer (NSCLC) is an established treatment modality; however, it only benefits a minority of patients. STAT3 (signal transducer and activator of transcription-3) plays an important role in the oncogenic signal transduction pathway of NSCLC. Inhibition of STAT3 results in NSCLC growth inhibition and apoptosis. We have previously shown that combined inhibition of EGFR and STAT3 by small molecules resulted in improved therapeutic efficacy as compared with blocking EGFR alone. However, the STAT3 protein has a number of endogenous negative regulators including PIAS3 (Protein Inhibitor of Activated STAT3). In this study, we investigated for the first time the role of PIAS3 in modulating oncogenic EGFR-STAT3 signaling pathway in lung cancer and the anti-proliferative effect of using PIAS3 in conjunction with EGFR blockade in NSCLC. We demonstrate that PIAS3 is expressed in variable degrees in all NSCLC cells. EGF and IL-6 stimulation resulted in the association of PIAS3 with STAT3. The PIAS3/STAT3 complex then bound the STAT3 DNA binding sequence resulting in STAT3 regulated gene expression. Over-expression of PIAS3, using a PIAS3 expression construct, decreases STAT3 transcriptional activity. Furthermore, over-expression of PIAS3 consistently decreased proliferation. EGFR blockade and PIAS3 over-expression in combination had significantly greater anti-proliferative effects as compared with either EGFR blockade or PIAS3 over-expression alone. In conclusion, PIAS3 is expressed in NSCLC cell lines and its over-expression decreased STAT3 transcriptional activity, decreased proliferation of NSCLC cells and when used in conjunction with EGFR inhibitors, increased the anti-proliferative effects.