The dispersion of the in‐plane CuO bond stretching LO phonon mode in the high‐TCcuprate superconductors shows strong softening with the optimum doped samples near the zone boundary, but the overdoped samples with zeroTCdoes not show the anomalous softening. This fact suggests that the phonon is closely related to the mechanism of the high‐TCsuperconductivity. The softening can be described with a negative electronic dielectric function that results in overscreening of the inter‐site Coulomb interaction in the highly correlated cuprate systems. We propose that such a strong electron‐phonon coupling of specific modes can form basis for phonon mechanism of high‐temperature superconductivity. On the basis of the model, with the Eliashberg theory using the experimentally determined electron dispersion and dielectric function, we demonstrate the possibility of superconductivity with the order parameter of the symmetry and the transition temperature well in excess of 100K. © 2003 American Institute of Physics