Hepatocellular carcinoma (HCC) is one of the most lethal human cancers worldwide. The dietary xanthone α-mangostin (α-MGT) exhibits potent anti-tumor effects in vitro and in vivo. However, the anti-HCC effects of α-MGT and their underlying mechanisms are still vague. Aberrant activation of signal transducer and activator of transcription 3 (STAT3) is involved in the progression of HCC. We therefore investigated whether α-MGT inhibited the activation of STAT3 and thereby exhibits its anti-HCC effects. In this study, we found that α-MGT significantly suppressed cell proliferation, induced cell cycle arrest, and triggered apoptosis in HCC cells, including HepG2, SK-Hep-1, Huh7, and SMMC-7721 cells in vitro, as well as inhibiting tumor growth in nude mice bearing HepG2 or SK-Hep-1 xenografts. Furthermore, α-MGT potently inhibited the constitutive and inducible activation of STAT3 in HCC cells. In addition, α-MGT also suppressed IL-6-induced dimerization and nuclear translocation of STAT3, which led to inhibition of the expression of STAT3-regulated genes at both mRNA and protein levels. Mechanistically, α-MGT exhibited effective inhibition of the activation of STAT3's upstream kinases, including JAK2, Src, ERK, and Akt. Importantly, α-MGT increased the protein level of Src homology region 2 domain-containing phosphatase-1 (SHP1), which is a key negative regulator of the STAT3 signaling pathway. Furthermore, α-MGT enhanced the stabilization of SHP1 by inhibiting its degradation mediated by the ubiquitin-proteasome pathway. Knockdown of SHP1 using siRNA obviously prevented the α-MGT-mediated inhibition of the activation of STAT3 and proliferation of HCC cells. In summary, α-MGT exhibited a potent anti-HCC effect by blocking the STAT3 signaling pathway via the suppression of the degradation of SHP1 induced by the ubiquitin-proteasome pathway. These findings also suggested the potential of dietary derived α-MGT in HCC therapy.