Accumulation of both interstitial myofibroblasts and excessive production of extracellular matrix proteins is a common pathway contributing to chronic kidney disease. In a number of tissues, activation of STAT3 (signal transducer and activator of transcription 3) increases expression of multiple profibrotic genes. Here, we examined the effect of a STAT3 inhibitor, S3I-201, on activation of renal interstitial fibroblasts and progression of renal fibrosis. Treatment of cultured rat renal interstitial fibroblasts with S3I-201 inhibited their activation, as evidenced by dose- and time-dependent blockade of alpha-smooth muscle actin and fibronectin expression. In a mouse model of renal interstitial fibrosis induced by unilateral ureteral obstruction, STAT3 was activated, and administration of S3I-201 attenuated both this activation and extracellular matrix protein deposition following injury. S3I-201 reduced infiltration of the injured kidney by inflammatory cells and suppressed the injury-induced expression of fibronectin, alpha-smooth muscle actin, and collagen type-1 proteins, as well as the expression of multiple cytokines. Furthermore, S3I-201 inhibited proliferation and induced apoptosis preferentially in renal interstitial fibroblasts of the obstructed kidney. Thus, our results suggest that increased STAT3 activity mediates activation of renal interstitial fibroblasts and the progression of renal fibrosis. Inhibition of STAT3 signaling with S3I-201 may hold therapeutic potential for fibrotic kidney diseases.