The molecular modeling of the phosphotyrosine (pTyr)–SH2 domain interaction in the Stat3:Stat3 dimerization, combined with in silico structural analysis of the Stat3 dimerization disruptor, S3I-201, has furnished a diverse set of analogs. We present evidence from in vitro biochemical and biophysical studies that the structural analog, S3I-201.1066 directly interacts with Stat3 or the SH2 domain, with an affinity (K_D) of 2.74μM, and disrupts the binding of Stat3 to the cognate pTyr–peptide, GpYLPQTV–NH₂, with an IC₅₀ of 23μM. Moreover, S3I-201.1066 selectively blocks the association of Stat3 with the epidermal growth factor receptor (EGFR), and inhibits Stat3 tyrosine phosphorylation and nuclear translocation in EGF-stimulated mouse fibroblasts. In cancer cells that harbor aberrant Stat3 activity, S3I-201.1066 inhibits constitutive Stat3 DNA-binding and transcriptional activities. By contrast, S3I-201.1066 has no effect on Src activation or the EGFR-mediated activation of the Erk1/2^MAPK pathway. S3I-201.1066 selectively suppresses the viability, survival, and malignant transformation of the human breast and pancreatic cancer lines and the v-Src-transformed mouse fibroblasts harboring persistently active Stat3. Treatment with S3I-201.1066 of malignant cells harboring aberrantly active Stat3 down-regulated the expression of c-Myc, Bcl-xL, Survivin, the matrix metalloproteinase 9, and VEGF. The in vivo administration of S3I-201.1066-induced significant antitumor response in mouse models of human breast cancer, which correlates with the inhibition of constitutively active Stat3 and the suppression of known Stat3-regulated genes. Our studies identify a novel small-molecule that binds with a high affinity to Stat3, blocks Stat3 activation and function, and thereby induces antitumor response in human breast tumor xenografts harboring persistently active Stat3.