Proteins of the protein tyrosine phosphatase (PTP) family are known to be signaling molecules that regulate a variety of cellular processes including cell growth, differentiation, and apoptosis. PTPN13 (also known as FAP1, PTPL1, PTPLE, PTPBAS, and PTP1E), a putative tumor suppressor, is frequently inactivated in lung carcinoma through the loss of either mRNA or protein expression. However, the molecular mechanisms underlying its dysregulation have not been fully explored. Interleukin-6 (IL-6) mediated Stat3 activation is viewed as crucial for multiple tumor growth and progression. Here, we demonstrate that PTPN13 is a direct transcriptional target of Stat3 in the squamous cell lung carcinoma. Our data show that IL-6 administration or transfection of a constitutively activated Stat3 in HCC-1588 and SK-MES-1 cells inhibits PTPN13 mRNA transcription. Using luciferase reporter and ChIP assays, we show that Stat3 binds to the promoter region of PTPN13 and promotes its activity through recruiting HDAC5. Thus, our results suggest a previously unknown Stat3-PTPN13 molecular network controlling squamous cell lung carcinoma development.