Signal transducers and activators of transcription (STAT)-3 is a latent cytosolic transcription factor that has been closely associated with survival, proliferation, chemoresistance, and metastasis of tumor cells. Whether the anti-proliferative, pro-apoptotic, and anti-metastatic effects of capillarisin (CPS), derived from Artemisia capillaris (Compositae), are linked to its capability to inhibit STAT3 activation was investigated. We found that CPS specifically inhibited both constitutive and inducible STAT3 activation at tyrosine residue 705 but not at serine residue 727 in human multiple myeloma cells. Besides the inhibition of STAT3 phosphorylation, CPS also abrogated STAT3 constitutive activity and nuclear translocation. The suppression of STAT3 was mediated through the inhibition of activation of upstream JAK1, JAK2, and c-Src kinases. Treatment with the protein tyrosine phosphatase (PTP) inhibitor pervanadate treatment reversed the CPS-induced down-regulation of JAK1/2 and STAT3, thereby suggesting the involvement of a PTP. Indeed, knockdown of the SHP-1 and SHP-2 genes by small interfering RNA suppressed the ability of CPS to inhibit JAK1 and STAT3 activation, suggesting the critical role of both SHP-1 and SHP-2 in its possible mechanism of action. CPS downregulated the expression of STAT3-regulated antiapoptotic and proliferative gene products; and this correlated with suppression of cell viability, the accumulation of cells in sub-G1 phase of cell cycle and induction of apoptosis. Moreover, CPS potentiated bortezomib-induced apoptotic effects in MM cells, and this correlated with down-regulation of various gene products that mediate cell proliferation (Cyclin D1 and COX-2), cell survival (Bcl-2, Bcl-xl, IAP1, IAP2, and Survivin), invasion (MMP-9), and angiogenesis (VEGF). Thus, overall, our results suggest that CPS is a novel blocker of STAT3 activation and thus may have a potential in negative regulation of growth, metastasis, and chemoresistance of tumor cells.