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Background and Purpose Hypertension adversely affects the kidney and is the second leading cause of kidney failure. Overproduction of angiotensin II greatly contributes to the progression of hypertensive kidney disease. Angiotensin II has recently been shown to activate STAT3 in cardiovascular cells. However, the underlying mechanisms of STAT3 activation by angiotensin II and downstream functional consequences in the kidneys are not fully understood. Experimental Approach C57BL/6 mice were treated with angiotensin II by subcutaneous infusion for 1 month to develop nephropathy. Mice were treated with either adeno‐associated virus expressing STAT3 shRNA or STAT3 inhibitor, S3I‐201. Human archival kidney samples from five patients with hypertension and five individuals without hypertension were also examined. In vitro, STAT3 was blocked using siRNA or STAT3 inhibitor S3I‐201 in the renal proximal tubular cell line, NRK52E, after exposure to angiotensin II. Key Results Angiotensin II activated STAT3 in kidney epithelial cells through engaging toll‐like receptor 4 (TLR4) and JAK2, which was independent of IL‐6/gp130 and angiotensin AT1 receptors. Angiotensin II‐mediated STAT3 activation increased fibrotic proteins and resulted in renal dysfunction. Both STAT3 inhibition by the low MW compound S3I‐201 and TLR4 deficiency normalized renal fibrosis and dysfunction caused by Ang II in mice, without affecting hypertension. Conclusions and Implications Our study reveals a novel mechanism of STAT3 activation, induced by angiotensin II, in kidney tissues and highlights a translational significance of a STAT3 inhibitor as potential therapeutic agent for hypertensive kidney disease.