Ptp4a3 (commonly known as PRL-3) is an enigmatic member of the Ptp4a family of prenylated protein tyrosine phosphatases that are highly expressed in many human cancers. Despite strong correlations with tumor metastasis and poor patient prognosis, there is very limited understanding of this gene family's role in malignancy. Therefore, we created a gene-targeted murine knockout model for Ptp4a3, the most widely studied Ptp4a family member. Mice deficient for Ptp4a3 were grossly normal. Fewer homozygous-null males were observed at weaning, however, and they maintained a decreased body mass. Although Ptp4a3 is normally associated with late-stage cancer and metastasis, we observed increased Ptp4a3 expression in the colon of wildtype mice immediately following treatment with the carcinogen azoxymethane. To investigate the role of Ptp4a3 in malignancy, we used the most commonly studied murine colitis-associated colon cancer model. Wildtype mice treated with azoxymethane and dextran sodium sulfate developed approximately 7-10 tumors per mouse in the distal colon. The resulting tumor tissue had 4-fold more Ptp4a3 mRNA relative to normal colon epithelium and increased PTP4A3 protein. Ptp4a3-null mice developed 50% fewer colon tumors than wildtype mice after exposure to azoxymethane and dextran sodium sulfate. Tumors from the Ptp4a3-null mice had elevated levels of both IGF1Rβ and c-MYC compared to tumors replete with Ptp4a3, suggesting an enhanced cell signaling pathway engagement in the absence of the phosphatase. These results provide the first definitive evidence implicating Ptp4a3 in colon tumorigenesis and highlight the potential value of the phosphatase as a therapeutic target for early stage malignant disease.