The glutathione peroxidases, a family of selenocysteine-containing redox enzymes, play pivotal roles in balancing the signaling, immunomodulatory, and deleterious effects of reactive oxygen species (ROS). The glutathione peroxidase GPX3 is the only extracellular member of this family, suggesting it may defend cells against ROS in the extracellular environment. Notably, GPX3 hypermethylation and underexpression occur commonly in prostate, gastric, cervical, thyroid, and colon cancers. We took a reverse genetics approach to investigate whether GPX3 would augment inflammatory colonic tumorigenesis, a process characterized by oxidative stress and inflammation, comparing Gpx3(-/-) mice in an established two-stage model of inflammatory colon carcinogenesis. Gpx3-deficient mice exhibited an increased tumor number, though not size, along with a higher degree of dysplasia. In addition, they exhibited increased inflammation with redistribution toward protumorigenic M2 macrophage subsets, increased proliferation, hyperactive WNT signaling, and increased DNA damage. To determine the impact of acute gene loss in an established colon cancer line, we silenced GPX3 in human Caco2 cells, resulting in increased ROS production, DNA damage and apoptosis in response to oxidative stress, combined with decreased contact-independent growth. Taken together, our results suggested an immunomodulatory role for GPX3 that limits the development of colitis-associated carcinoma.