Arsenic is a naturally occurring metalloid strongly associated with the incidence of lung cancer. Understanding the mechanisms of arsenic-induced carcinogenesis favors the development of effective interventions to reduce the incidence and mortality of lung cancer. In this study, we investigated the role of activating transcription factor 3 (ATF3) in arsenic-induced transformation of human bronchial epithelial cells. ATF3 was upregulated during chronic exposure to 0.25 μM arsenic, and loss of ATF3 promoted arsenic-induced transformation. Moreover, arsenic-transformed ATF3 knockout (ATF3 KO-AsT) cells exhibited more aggressive characteristics, including acceleration in proliferation, resistance to chemotherapy and increase in migratory capacity. RNA-seq revealed that pathways involved in inflammation, cell cycle, EMT and oncogenesis were affected due to ATF3 deficiency during chronic arsenic exposure. Further experiments confirmed the overproduction of IL-6, IL-8 and TNFα as well as enhanced phosphorylation of AKT and STAT3 in ATF3 KO-AsT cells. Our results demonstrate that ATF3 upregulated by chronic low-dose arsenic exposure represses cell transformation and acquisition of malignant characteristics through inhibiting the production of proinflammatory cytokines and activation of downstream proteins AKT and STAT3, providing a new strategy for the prevention of carcinogen-induced lung cancer.