SC-1, a sorafenib derivative, shows anti-tumor effects in osteogenic sarcoma cells. Despite significant advances in the treatment of osteosarcoma (OS), overall survival rate of OS patients has remained relatively constant for over two decades and novel approaches are needed to further improve prognosis. Here, we report the anti-tumor effect of SC-1, a novel sorafenib derivative that closely resembles sorafenib structurally but is devoid of kinase inhibitory activity, on OS cells through mediation of signal transducer and activator of transcription 3 (STAT3). SC-1 showed similar effects to sorafenib on growth inhibition and apoptosis, and downregulated phospho-STAT3 (p-STAT3) at tyrosine 705 in all tested OS cell lines (U2OS, HOS, and 143B). Expression of STAT3-driven genes, including cylcin D1 and c-myc, were also repressed by SC-1. Ectopic expression of STAT3 in 143B cells abolished apoptosis in SC-1-treated cells. Inhibition of SHP-1 decreased SC-1-induced apoptosis. SC-1 upregulated the activity of SHP-1 in tested OS cell lines in a dose-dependent manner. Finally, SC-1 reduced 143B tumor growth significantly in vivo, which was associated with downregulation of p-STAT3 and upregulation of SHP-1 activity. These data demonstrate that SC-1 has clinical potential for the treatment of OS patients.Copyright © 2012 Orthopaedic Research Society.