Annexin 7 (ANX7) acts as a tumor suppressor gene in prostate cancer, where loss of heterozygosity and reduction of ANX7 protein expression is associated with aggressive metastatic tumors. To investigate the mechanism by which this gene controls tumor development, we have developed an Anx7(+/-) knockout mouse. As hypothesized, the Anx7(+/-) mouse has a cancer-prone phenotype. The emerging tumors express low levels of Anx7 protein. Nonetheless, the wild-type Anx7 allele is detectable in laser-capture microdissection-derived tumor tissue cells. Genome array analysis of hepatocellular carcinoma tissue indicates that the Anx7(+/-) genotype is accompanied by profound reductions of expression of several other tumor suppressor genes, DNA repair genes, and apoptosis-related genes. In situ analysis by tissue imprinting from chromosomes in the primary tumor and spectral karyotyping analysis of derived cell lines identify chromosomal instability and clonal chromosomal aberrations. Furthermore, whereas 23% of the mutant mice develop spontaneous neoplasms, all mice exhibit growth anomalies, including gender-specific gigantism and organomegaly. We conclude that haploinsufficiency of Anx7 expression appears to drive disease progression to cancer because of genomic instability through a discrete signaling pathway involving other tumor suppressor genes, DNA-repair genes, and apoptosis-related genes.