Cylindromatosis (CYLD) is a deubiquitinating enzyme that is altered in patients with familial cylindromatosis, a condition characterized by numerous benign adnexal tumors. However, the regulatory function of CYLD remains unsettled. Here we show that the development of B cells, T cells, and myeloid cells was unaffected in CYLD-deficient mice, but that the activation of these cells with mediators of innate and adaptive immunity resulted in enhanced NF-κB and JNK activity associated with increased TNF receptor–associated factor 2 (TRAF2) and NF-κB essential modulator (NEMO) ubiquitination. CYLD-deficient mice were more susceptible to induced colonic inflammation and showed a dramatic increase in the incidence of tumors compared with controls in a colitis-associated cancer model. These results suggest that CYLD limits inflammation and tumorigenesis by regulating ubiquitination in vivo.