In this paper, we show that the photon-number squeezed state can be generated by optically pumped three-level atomic system. The Fano factor of the output radiation field has been calculated under the condition of incoherent pumping, weak coherent pumping and strong coherent pumping respectively. We find that the optimum squeezing effect of photon-number occurs in the situation of weak coherent pumping and the corresponding Fano factor is 0.16. This method of generating photon-number squeezed state is convenient and practical in experiment.