Activated STAT3 plays an important role in oncogenesis by stimulating cell proliferation and resisting apoptosis. STAT3 therefore is an attractive target for cancer therapy. We have screened a traditional Chinese herb medicine compound library and found Eriocalyxin B (EB), a diterpenoid from Isodon eriocalyx, as a specific inhibitor of STAT3. EB selectively inhibited constitutive as well as IL-6-induced phosphorylation of STAT3 and induced apoptosis of STAT3-dependent tumor cells. EB did not affect the upstream protein tyrosine kinases or the phosphatase (PTPase) of STAT3, but rather interacted directly with STAT3. The effects of EB could be abolished by DTT or GSH, suggesting a thiol-mediated covalent linkage between EB and STAT3. Site mutagenesis of cysteine in and near the SH2 domain of STAT3 identified Cys712 to be the critical amino acid for the EB-induced inactivation of STAT3. Furthermore, LC/MS/MS analyses demonstrated that an α, β-unsaturated carbonyl of EB covalently interacted with the Cys712 of STAT3. Computational modeling analyses also supported a direct interaction between EB and the Cys712 of STAT3. These data strongly suggest that EB directly targets STAT3 through a covalent linkage to inhibit the phosphorylation and activation of STAT3 and induces apoptosis of STAT3-dependent tumor cells.