Chronic mucosal inflammation and tissue damage predisposes patients to the development of colorectal cancer. This association could be explained by the hypothesis that the same factors and pathways important for wound healing also promote tumorigenesis. A sensor of tissue damage should induce these factors to promote tissue repair and regulate their action to prevent development of cancer. Interleukin 22 (IL-22), a cytokine of the IL-10 superfamily, has an important role in colonic epithelial cell repair, and its levels are increased in the blood and intestine of inflammatory bowel disease patients. This cytokine can be neutralized by the soluble IL-22 receptor, known as the IL-22 binding protein (IL-22BP, also known as IL22RA2); however, the significance of endogenous IL-22BP in vivo and the pathways that regulate this receptor are unknown. Here we describe that IL-22BP has a crucial role in controlling tumorigenesis and epithelial cell proliferation in the colon. IL-22BP is highly expressed by dendritic cells in the colon in steady-state conditions. Sensing of intestinal tissue damage via the NLRP3 or NLRP6 inflammasomes led to an IL-18-dependent downregulation of IL-22BP, thereby increasing the ratio of IL-22/IL-22BP. IL-22, which is induced during intestinal tissue damage, exerted protective properties during the peak of damage, but promoted tumour development if uncontrolled during the recovery phase. Thus, the IL-22-IL-22BP axis critically regulates intestinal tissue repair and tumorigenesis in the colon.