Constitutive and inducible activation of signal transducer and activator of transcription 3 (STAT3) signaling facilitates the carcinogenesis in most human cancers including acute myeloid leukemia (AML). Negative regulators, such as protein tyrosine phosphatases SHP1, inhibit the activated STAT3 signaling. In this study, we investigated the effect of honokiol (HNK), a constituent of Magnolia officinalis, on the STAT3 signaling. STAT3 signaling and SHP1 expression were measured by quantitative real-time PCR and western blotting in leukemic cell lines and primary AML blasts treated with HNK. HNK decreased the phosphorylated STAT3 but not the total STAT3 through increasing the expression of SHP1. In addition, HNK inhibited transcription activity of STAT3, reduced nuclear translocation of STAT3, and decreased the expression of STAT3 target genes. Knockdown of SHP1 by small hairpin RNA (shRNA) or treatment with vanadate, a protein tyrosine phosphatases inhibitor, abolished HNK-induced STAT3 inhibition, suggesting that SHP1 plays an important role in the inhibition of STAT3 signaling by HNK. Further, HNK increased the expression of transcript factor PU.1, which had been reported to activate the expression of SHP1 via binding SHP1 promoter region. Knockdown of PU.1 reversed HNK-induced upregulation of SHP1 and inactivation of STAT3 signaling. Finally, HNK increased the expression of PU.1 and SHP1 in hematopoietic progenitors isolated from patients with AML. In conclusion, our data have shown a regulatory mechanism underlying the inhibition of STAT3 signaling by HNK. Therefore, as a relative non-toxic compound, HNK may offer a therapeutic advantage in the clinical treatment for AML.