Abstract Background and significance Chimeric antigen receptor (CAR)-T cell therapy shows promising potency for treating patients with hematological malignancies. However, follow-up data indicate that only 30% to 50% of these patients experience long-term disease control. In solid tumors, the B7-H3 transmembrane protein is an emerging target that harbors in its ectodomain two distinct epitope motifs - IgC and IgV. Here, we developed nanobody-based CAR-T cell strategy targeting B7-H3 and investigated its anti-tumor efficacy in xenograft mouse models. Methods We isolated anti-B7-H3 VHHs from our large dromedary camel VHH nanobody libraries with great diversity (> 1012 total) by phage display technology. The binding of isolated VHHs was validated by ELISA, flow cytometry, and Octet. A B7-H3 peptide library was synthesized to predict the epitope of select VHHs. Anti-tumor effect of B7-H3 CAR-T cells was determined via cell luciferase-based cell killing assay as well as xenograft mouse models. Two tumor models, human neuroblastoma and pancreatic adenocarcinoma, were used in the present study. Single-cell transcriptome RNA sequencing coupled with single T-cell functional proteomics analysis was used to analyze the functionality of nanobody-based B7-H3 CAR-T cells. Results We analyzed the isoforms of B7-H3 at the RNA and protein levels and validated that only 4IgB7-H3 is a therapeutic target as the dominant isoform in tumors. Targeting 4Ig isoform, we obtained a panel of high-affinity nanobodies cross-reactive to human, mouse, rat, and monkey. Furthermore, we demonstrated that CAR-T cells based on the nanobodies had potent antitumor activity against tumors with rigorous T cell signaling and significant tumor infiltration. Mechanistically, we uncovered the top-upregulated genes that might be critical for the persistence of polyfunctional CAR-T cells in the tumor microenvironment. Conclusions Our results provide a novel nanobody-based B7-H3 CAR-T product for use in solid tumor therapy.