Signaling components, which confer an "addiction" phenotype on cancer cells, represent promising drug targets. The transcription factor signal transducers and activators of transcription 3 (STAT3) is constitutively activated in many different types of tumor cells and its activity is indispensible in a large fraction. We found that the expression of the endogenous inhibitor of STAT3, protein inhibitor of activated STAT3 (PIAS3), positively correlates with STAT3 activation in normal cells. This suggests that PIAS3 controls the extent and the duration of STAT3 activity in normal cells and thus prevents its oncogenic function. In cancer cells, however, the expression of PIAS3 is posttranscriptionally suppressed, possibly enhancing the oncogenic effects of activated STAT3. We delimited the interacting domains of STAT3 and PIAS3 and identified a short fragment of the COOH-terminal acidic region of PIAS3, which binds strongly to the coiled-coil domain of STAT3. This PIAS3 fragment was used to derive the recombinant STAT3-specific inhibitor rPP-C8. The addition of a protein transduction domain allowed the efficient internalization of rPP-C8 into cancer cells. This resulted in the suppression of STAT3 target gene expression, in the inhibition of migration and proliferation, and in the induction of apoptosis at low concentrations [half maximal effective concentration (EC 50 ), <3 μmol/L]. rPP-C8 did not affect normal fibroblasts and represents an interesting lead for the development of novel cancer drugs targeting the coiled-coil domain of STAT3. Mol Cancer Res; 8(4); 539-53. ©2010 AACR.