The novel multitargeted tyrosine kinase inhibitor sunitinib is used as an antiangiogenic agent for the treatment of several types of cancer, including metastatic renal cell carcinoma (RCC). Sunitinib was shown to positively change the immunosuppressive phenotype in RCC patients. To improve its antitumor efficacy, and offer strategies for its combination with other approaches, it is critical to fully elucidate its mechanisms of action. We show that sunitinib induces tumor cell apoptosis and growth arrest in RCC tumor cells, which correlates with signal transducer and activator of transcription 3 (Stat3) activity inhibition. Sunitinib-mediated direct effects on tumor cells occur regardless of von Hippel-Lindau tumor suppressor gene status and hypoxia-inducible transcription factor-2α levels. Reduction of Stat3 activity enhances the antitumor effects of sunitinib, whereas expression of a constitutively activated Stat3 mutant rescues tumor cell death. Intravital multiphoton microscopy data show that sunitinib induces mouse Renca tumor cell apoptosis in vivo before tumor vasculature collapse. Sunitinib also inhibits Stat3 in Renca tumor–associated myeloid-derived suppressor cells (MDSC), down-regulates angiogenic gene expression, and reduces MDSCs and tumor T regulatory cells. These results suggest that Stat3 activity is important for RCC response to sunitinib, and Stat3 inhibition permits the direct proapoptotic activity of sunitinib on tumor cells and positive effects on tumor immunologic microenvironment. [Cancer Res 2009;69(6):2506–13]