The transcription factor forkhead box D3 (FOXD3) is an important member of the FOX family, which can maintain the pluripotent properties of cell clusters, neural crest, and trophoblastic progenitor cells in vivo. It has been shown that FOXD3 could affect proliferation, migration, and angiogenesis of various tumors and its deletion and overexpression in organisms will undoubtedly have important influence on the change of cell fate and the occurrence of tumors. However, the underlying functions and molecular mechanisms of FOXD3 in esophageal squamous cell carcinoma (ESCC) have not been fully clarified. According to the present study, the expression levels and functional roles of FOXD3 were investigated, and its prognostic value and molecular mechanisms in tumorigenesis and progression of ESCC were clarified. The expression level of FOXD3 was significantly downregulated in ESCC tissues and cell lines, and correlated with gender, family history of upper gastrointestinal cancer, TNM stage, depth of invasion, lymph node metastasis, and ESCC patients' survival. Moreover, FOXD3 inhibited cells migration and invasion as well as participated in TGF-beta 1 induced epithelial-mesenchymal transition process. Furthermore, a positive correlation between FOXD3 and SMAD family member 7 (SMAD7) was explored in ESCC. FOXD3 could directly bind to promoter regions of SMAD7 gene, leading to transcriptional promotion of SMAD7 in human esophageal cancer cells. Taken together, FOXD3 may play a tumor suppressor role in ESCC and may be applied as a new therapeutic target and prognostic marker for ESCC.