Although γ-tocotrienol (T3), a vitamin E isolated primarily from palm and rice bran oil, has been linked with anticancer activities, the mechanism of this action is poorly understood. In this study, we investigated whether γ-T3 can modulate the STAT3 cell signaling pathway, closely linked to inflammation and tumorigenesis. We found that γ-T3 but not γ-tocopherol, the most common saturated form of vitamin E, inhibited constitutive activation of STAT3 in a dose- and time-dependent manner, and this inhibition was not cell type-specific. γ-T3 also inhibited STAT3 DNA binding. This correlated with inhibition of Src kinase and JAK1 and JAK2 kinases. Pervanadate reversed the γ-T3-induced down-regulation of STAT3 activation, suggesting the involvement of a protein-tyrosine phosphatase. When examined further, we found that γ-T3 induced the expression of the tyrosine phosphatase SHP-1, and gene silencing of the SHP-1 by small interfering RNA abolished the ability of γ-T3 to inhibit STAT3 activation, suggesting a vital role for SHP-1 in the action of γ-T3. Also γ-T3 down-modulated activation of STAT3 and induced SHP-1 in vivo. Eventually, γ-T3 down-regulated the expression of STAT3-regulated antiapoptotic (Bcl-2, Bcl-xL, and Mcl-1), proliferative (cyclin D1), and angiogenic (VEGF) gene products; and this correlated with suppression of proliferation, the accumulation of cells in sub-G(1) phase of the cell cycle, and induction of apoptosis. This vitamin also sensitized the tumor cells to the apoptotic effects of thalidomide and bortezomib. Overall, our results suggest that γ-T3 is a novel blocker of STAT3 activation pathway both in vitro and in vivo and thus may have potential in prevention and treatment of cancers.