Endometriosis is a major cause of chronic pelvic pain and infertility. Activation of STAT3 appears central to the inflammatory phenotype of eutopic endometrium in women with endometriosis. However, the molecular mechanism by which this occurs remains unknown. Our objective is to determine how STAT3 activity is regulated in endometriosis. Protein inhibitor of activated STAT3 (PIAS3) is a negative regulator of STAT3 activity. We examined the levels of PIAS3 in endometrium from women with and without endometriosis using Western blot analysis and immunohistochemistry. Levels of PIAS3 are significantly lower, in contrast with phosphorylation of STAT3, in women with endometriosis compared to women without endometriosis. Furthermore, induction of endometriosis in the baboon showed a significant reduction of PIAS3 expression during the progression of the disease. Interferon-γ (INFγ) reduces PIAS3 protein levels and increases phospho-STAT3 levels through CXCL10 in endometrial cells, Ishikawa, and 12Z cells. These results suggest that attenuation of PIAS3 causes aberrant activation of STAT3 in endometriosis, leading to inflammatory changes that may impair fertility or cause pain.