Although toll-like receptor (TLR) agonists, such as CpG, are used as immunotherapeutic agents in clinical trials for cancer and infectious diseases, their effects are limited and the underlying mechanism(s) that restrains CpG efficacy remains obscure. Here, we show that signal transducer and activator of transcription 3 (Stat3) plays a key role in down-modulating immunostimulatory effects of CpG. In the absence of interleukin-6 (IL-6) and IL-10 induction, CpG directly activates Stat3 within minutes through TLR9. Ablating Stat3 in hematopoietic cells results in rapid activation of innate immunity by CpG, with enhanced production of IFN-gamma, tumor necrosis factor-alpha, IL-12, and activation of macrophages, neutrophils, and natural killer cells marked with Stat1 activation. Innate immune responses induced by CpG in mice with a Stat3-ablated hematopoietic system cause potent antitumor effects, leading to eradication of large (>1 cm) B16 melanoma tumors within 72 h. Moreover, ablating Stat3 in myeloid cells increases CpG-induced dendritic cell maturation, T-cell activation, generation of tumor antigen-specific T cells, and long-lasting antitumor immunity. A critical role of Stat3 in mediating immunosuppression by certain cytokines and growth factors in the tumor microenvironment has been recently documented. By demonstrating direct and rapid activation of Stat3 by TLR agonists, we identify a second level of Stat3-mediated immunosuppression. Our results further suggest that targeting Stat3 can drastically improve CpG-based immunotherapeutic approaches.