Coal tar is one of the oldest and an effective treatment for psoriasis. Coal tar has been directly applied to the skin, or used in combination with UV light as part of the Goeckerman treatment. The use of coal tar has caused long-term remissions in psoriasis, but has fallen out of favor because the treatment requires hospitalization and coal tar is poorly acceptable aesthetically to patients. Thus, determining the active antipsoriatic component of coal tar is of considerable therapeutic interest. We fractionated coal tar into its components, and tested them using the SVR angiogenesis inhibitor assay. Treatment of SVR endothelial cells with coal tar fractions resulted in the isolation of a single fraction with antiangiogenic activity. The active antiangiogenic compound in coal tar is carbazole. In addition to antiangiogenic activity, carbazole inhibited the production of inflammatory IL-15 by human mononuclear cells. IL-15 is elevated in psoriasis and is thought to contribute to psoriatic inflammation. Carbazole treatment also reduced activity of inducible nitric oxide synthase (iNOS), which is proinflammatory and elevated in psoriasis. The effect of carbazole on upstream pathways in human psoriasis was determined, and carbazole was shown to inhibit signal transducer and activator of transcription (stat)3-mediated transcription, which has been shown to be relevant in human psoriasis. IL-15, iNOS, and stat3 activation require the activation of the small GTPase rac for optimal activity. Carbazole was found to inhibit rac activation as a mechanism for its inhibition of downstream inflammatory and angiogenic pathways. Given its antiangiogenic and anti-inflammatory activities, carbazole is likely a major component of the antipsoriatic activity of coal tar. Carbazole and derivatives may be useful in the therapy of human psoriasis.