Since cancer is the leading cause of death worldwide, there is an urgent need to understand the mechanisms underlying cancer progression and the development of cancer inhibitors. Signal transducer and activator of transcription 3 (STAT3) is a major transcription factor that regulates the proliferation and survival of various cancer cells. Here, dual-specificity phosphatase 3 (DUSP3) was identified as a regulator of STAT3 based on an interaction screening performed using the protein tyrosine phosphatase library. DUSP3 interacted with the C-terminal domain of STAT3 and dephosphorylated p-Y705 of STAT3. In vitro dephosphorylation assay revealed that DUSP3 directly dephosphorylated p-STAT3. The suppressive effects of DUSP3 on STAT3 were evaluated by a decreased STAT3-specific promoter activity, which in turn reduced the expression of the downstream target genes of STAT3. In summary, DUSP3 downregulated the transcriptional activity of STAT3 via dephosphorylation at Y705 and also suppressed the migratory activity of cancer cells. This study demonstrated that DUSP3 inhibits interleukin 6 (IL-6)/STAT3 signaling and is expected to regulate cancer development. Novel functions of DUSP3 discovered in IL-6/STAT3 signaling regulation would help expand the understanding of cancer development mechanisms. [BMB Reports 2020; 53(6): 335-340].