Although NOD2 is the major inflammatory bowel disease susceptibility gene, its role in colorectal tumorigenesis is poorly defined. Here, we show that Nod2-deficient mice are highly susceptible to experimental colorectal tumorigenesis independent of gut microbial dysbiosis. Interestingly, the expression of inflammatory genes and the activation of inflammatory pathways, including NF-κB, ERK, and STAT3 are significantly higher in Nod2^−/− mouse colons during colitis and colorectal tumorigenesis, but not at homeostasis. Consistent with higher inflammation, there is greater proliferation of epithelial cells in hyperplastic regions of Nod2^−/− colons. In vitro studies demonstrate that, while NOD2 activates the NF-κB and MAPK pathways in response to MDP, it inhibits TLR-mediated activation of NF-κB and MAPK. Notably, NOD2-mediated downregulation of NF-κB and MAPK is associated with the induction of IRF4. Taken together, NOD2 plays a critical role in the suppression of inflammation and tumorigenesis in the colon via downregulation of the TLR signaling pathways.