Klotho is an anti-aging transmembrane protein, which can be shed and function as a hormone. Accumulating data indicate klotho as a tumor suppressor in a wide array of malignancies and indicate the subdomain KL1 as the active region of the protein. We aimed to study the role of klotho as a tumor suppressor in colorectal cancer. Bioinformatics analyses of TCGA datasets indicated reduced klotho mRNA levels in human colorectal cancer, along with negative regulation of klotho expression by hypermethylation of the promoter and 1st exon, and hypomethylation of an area within the gene. Overexpression or treatment with klotho or KL1 inhibited proliferation of colorectal cancer cells in vitro. The in vivo activity of klotho and KL1 was examined using two models recapitulating development of tumors in the normal colonic environment of immune-competent mice. Treatment with klotho inhibited formation of colon polyps induced by the carcinogen azoxymethane, and KL1 treatment slowed growth of orthotopically-implanted colorectal tumors. Gene expression array revealed that klotho and KL1 expression enhanced the unfolded protein response (UPR) and this was further established by increased levels of spliced XBP1, GRP78 and phosphorylated-eIF2α. Furthermore, attenuation of the UPR partially abrogated klotho tumor suppressor activity. In conclusion, this study indicates klotho as a tumor suppressor in colorectal cancer and identifies, for the first time, the UPR as a pathway mediating klotho activities in cancer. These data suggest that administration of exogenous klotho or KL1 may serve as a novel strategy for prevention and treatment of colorectal cancer.