The methylcytosine dioxygenase TET1 ('ten-eleven translocation 1') is an important regulator of 5-hydroxymethylcytosine (5hmC) in embryonic stem cells. The diminished expression of TET proteins and loss of 5hmC in many tumors suggests a critical role for the maintenance of this epigenetic modification. Here we found that deletion of Tet1 promoted the development of B cell lymphoma in mice. TET1 was required for maintenance of the normal abundance and distribution of 5hmC, which prevented hypermethylation of DNA, and for regulation of the B cell lineage and of genes encoding molecules involved in chromosome maintenance and DNA repair. Whole-exome sequencing of TET1-deficient tumors revealed mutations frequently found in non-Hodgkin B cell lymphoma (B-NHL), in which TET1 was hypermethylated and transcriptionally silenced. Our findings provide in vivo evidence of a function for TET1 as a tumor suppressor of hematopoietic malignancy.