Dedifferentiation, migration, and proliferation of resident vascular smooth muscle cells (SMCs) are key components of neointima formation after vascular injury. Activation of signal transducer and activator of transcription-3 (STAT3) is suggested to be critically involved in this process, but the complex regulation of STAT3-dependent genes and the functional significance of inhibiting this pathway during the development of vascular proliferative diseases remain elusive. In this study, we demonstrate that STAT3 was activated in neointimal lesions following wire-induced injury in mice. Phosphorylation of STAT3 induced trans-activation of cyclin D1 and survivin in SMCs in vitro and in neointimal cells in vivo, thus promoting proliferation and migration of SMCs as well as reducing apoptotic cell death. WP1066, a highly potent inhibitor of STAT3 signaling, abrogated phosphorylation of STAT3 and dose-dependently inhibited the functional effects of activated STAT3 in stimulated SMCs. The local application of WP1066 via a thermosensitive pluronic F-127 gel around the dilated arteries significantly inhibited proliferation of neointimal cells and decreased the neointimal lesion size at 3 weeks after injury. Even though WP1066 application attenuated the injury-induced up-regulation of the chemokine RANTES at 6 h after injury, there was no significant effect on the accumulation of circulating cells at 1 week after injury. In conclusion, these data identify STAT3 as a key molecule for the proliferative response of SMC and neointima formation. Moreover, inhibition of STAT3 by the potent and specific compound WP1066 might represent a novel and attractive approach for the local treatment of vascular proliferative diseases.