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The cyclin-dependent kinase inhibitor p27Kip1 is a tumor suppressor whose intrinsic activity in cancer cells correlates with tumor aggressiveness, invasiveness, and impaired tumor cell differentiation. Here we explore whether p27Kip1 indirectly influences tumor progression by restricting expansion and survival of effector memory T cell (TEM) populations in a preclinical model of spontaneous colitis-associated colorectal cancer (CAC). We show mRNA and protein expression of p27Kip1 to be significantly decreased in the colons of mice with a T cell-restricted deletion of the TGF-β intermediate, SMAD4 (Smad4TKO). Loss of p27Kip1 expression in T cells correlates with the onset of spontaneous CAC in Smad4TKO mice by 8 months of age. This phenotype is greatly accelerated by the introduction of a germline deletion of CDKN1b (the gene encoding p27Kip1) in Smad4TKO mice (Smad4TKO/p27Kip1-/-, DKO). DKO mice display colon carcinoma by 3 months of age and increased mortality compared to Smad4TKO. Importantly, the phenotype in DKO mice is associated with a significant increase in the frequency of effector CD4 T cells expressing abundant IFN-γ and with a concomitant decrease in Foxp3+ regulatory T cells, both in the intestinal mucosa and in the periphery. In addition, induction of inflammatory mediators (IFN-γ, TNF-γ, IL-6, IL-1β, iNOS) and activation of Stat1, Stat3, and IκB is also observed in the colon as early as 1–2 months of age. Our data suggest that genomic alterations known to influence p27Kip1 abundance in gastrointestinal cancers may indirectly promote epithelial malignancy by augmenting the production of inflammatory mediators from a spontaneously expanding pool of TEM cells.