Alloreactivity negatively influences outcomes of organ transplantation or HCT from allogeneic donors. Standard pharmacologic immune suppression impairs T-cell function and jeopardizes the beneficial reconstitution of Tregs. Murine transplantation models have shown that STAT3 is highly expressed in alloreactive T cells and may be therapeutically targeted. The influence and effects of STAT3 neutralization in human alloreactivity, however, remain to be elucidated. In this study, S3I-201, a selective small-molecule inhibitor of STAT3, suppressed human DC-allosensitized T-cell proliferation and abrogated Th17 responses. STAT3 blockade significantly enhanced the expansion of potent iTregs and permitted CD8⁺ cytolytic effector function. Mechanistically, S3I-201 polarized the ratio of STAT phosphorylation in favor of STAT5 over STAT3 and also achieved a significant degree of Foxp3 demethylation among the iTregs. Conversely, selective impairment of STAT5 phosphorylation with CAS 285986-31-4 markedly reduced iTregs. STAT3 represents a relevant target for achieving control over human alloresponses, where its suppression facilitates STAT5-mediated iTreg growth and function.