Inflammatory myofibroblastic tumors (IMTs) are characterized by myofibroblast proliferation and an inflammatory cell infiltrate. Little is known about the molecular pathways that precipitate IMT formation. Here, we report the identification of somatic mutations in UPF1, a gene that encodes an essential component of the nonsense-mediated RNA decay (NMD) pathway, in 13 of 15 pulmonary IMT samples. The majority of mutations occurred in a specific region of UPF1 and triggered UPF1 alternative splicing. Several mRNA targets of the NMD pathway were upregulated in IMT samples, indicating that the UPF1 mutations led to reduced NMD magnitude. These upregulated NMD targets included NIK mRNA, which encodes a potent activator of NF-κB. In human lung cells, UPF1 depletion increased expression of chemokine-encoding genes in a NIK-dependent manner. Elevated chemokines and IgE class switching events were observed in IMT samples, consistent with NIK upregulation in these tumors. Together, these results support a model in which UPF1 mutations downregulate NMD, leading to NIK-dependent NF-κB induction, which contributes to the immune infiltration that is characteristic of IMTs. The molecular link between the NMD pathway and IMTs has implications for the diagnosis and treatment of these tumors.