Abstract The role of mesenchymal stem cells (MSCs) in tumorigenesis remains controversial. Therefore, our goal was to determine whether exogenous MSCs possess intrinsic antineoplastic or proneoplastic properties in azoxymethane (AOM)-induced carcinogenesis. Three in vivo models were studied: an AOM/dextran sulfate sodium colitis-associated carcinoma model, an aberrant crypt foci model, and a model to assess the acute apoptotic response of a genotoxic carcinogen (AARGC). We also performed in vitro coculture experiments. As a result, we found that MSCs partially canceled AOM-induced tumor initiation but not tumor promotion. Moreover, MSCs inhibited the AARGC in colonic epithelial cells because of the removal of O6-methylguanine (O6MeG) adducts through O6MeG-DNA methyltransferase activation. Furthermore, MSCs broadly affected the cell-cycle machinery, potentially leading to G1 arrest in vivo. Coculture of IEC-6 rat intestinal cells with MSCs not only arrested the cell cycle at the G1 phase, but also induced apoptosis. The anti-carcinogenetic properties of MSCs in vitro required transforming growth factor (TGF)-β signaling because such properties were completely abrogated by absorption of TGF-β under indirect coculture conditions. MSCs inhibited AOM-induced tumor initiation by preventing the initiating cells from sustaining DNA insults and subsequently inducing G1 arrest in the initiated cells that escaped from the AARGC. Furthermore, tumor initiation perturbed by MSCs might potentially dysregulate WNT and TGF-β-Smad signaling pathways in subsequent tumorigenesis. Obtaining a better understanding of MSC functions in colon carcinogenesis is essential before commencing the broader clinical application of promising MSC-based therapies for cancer-prone patients with inflammatory bowel disease. Stem Cells 2014;32:913–925