Signal transducer and activator of transcription 3 (STAT3) is constitutively activated in malignant tumors and has important roles in multiple aspects of cancer aggressiveness. Thus targeting STAT3 promises to be an attractive strategy for treatment of advanced metastatic tumors. Although many STAT3 inhibitors targeting the SH2 domain have been reported, few have moved into clinical trials. Targeting the DNA-binding domain (DBD) of STAT3, however, has been avoided due to its ‘undruggable’ nature and potentially limited selectivity. In a previous study, we reported an improved in silico approach targeting the DBD of STAT3 that resulted in a small-molecule STAT3 inhibitor (inS3-54). Further studies, however, showed that inS3-54 has off-target effect although it is selective to STAT3 over STAT1. In this study, we describe an extensive structure and activity-guided hit optimization and mechanistic characterization effort, which led to identification of an improved lead compound (inS3-54A18) with increased specificity and pharmacological properties. InS3-54A18 not only binds directly to the DBD and inhibits the DNA-binding activity of STAT3 both in vitro and in situ but also effectively inhibits the constitutive and interleukin-6-stimulated expression of STAT3 downstream target genes. InS3-54A18 is completely soluble in an oral formulation and effectively inhibits lung xenograft tumor growth and metastasis with little adverse effect on animals. Thus inS3-54A18 may serve as a potential candidate for further development as anticancer therapeutics targeting the DBD of human STAT3 and DBD of transcription factors may not be ‘undruggable’ as previously thought.