Smad and STAT proteins are critical signal transducers and transcription factors in controlling cell growth and tumorigenesis. Here we report that the STAT3 signaling pathway attenuates transforming growth factor-β (TGF-β)-induced responses through a direct Smad3–STAT3 interplay. Activated STAT3 blunts TGF-β-mediated signaling. Depletion of STAT3 promotes TGF-β-mediated transcriptional and physiological responses, including cell cycle arrest, apoptosis and epithelial-to-mesenchymal transition. STAT3 directly interacts with Smad3 in vivo and in vitro, resulting in attenuation of the Smad3–Smad4 complex formation and suppression of DNA-binding ability of Smad3. The N-terminal region of DNA-binding domain of STAT3 is responsible for the STAT3–Smad3 interaction and also indispensable for STAT3-mediated inhibition of TGF-β signaling. Thus, our finding illustrates a direct crosstalk between the STAT3 and Smad3 signaling pathways that may contribute to tumor development and inflammation.