In IBD patients, integration between a hyper-activated immune system and epithelial cell plasticity underlies colon cancer development. However, molecular regulation of such a circuity remains undefined. Claudin-1 (Cld-1), a tight-junction integral protein deregulation alters colonic epithelial cell (CEC) differentiation, and promotes colitis severity while impairing colitis-associated injury/repair. Tumorigenesis is a product of an unregulated wound-healing process and therefore we postulated that upregulated Cld-1 levels render IBD patients susceptible to the colitis-associated cancer (CAC). Villin Cld-1 mice are used to carryout overexpressed studies in mice. The role of deregulated Cld-1 expression in CAC and the underlying mechanism was determined using a well-constructed study scheme and mouse models of DSS colitis/recovery and CAC. Using an inclusive investigative scheme, we here report that upregulated Cld-1 expression promotes susceptibility to the CAC and its malignancy. Increased mucosal inflammation and defective epithelial homeostasis accompanied the increased CAC in Villin-Cld-1-Tg mice. We further found significantly increased levels of protumorigenic M2 macrophages and β-cateninSer552 (β-CatSer552) expression in the CAC in Cld-1Tg vs. WT mice. Mechanistic studies identified the role of PI3K/Akt signaling in Cld-1-dependent activation of the β-CatSer552, which, in turn, was dependent on proinflammatory signals. Our studies identify a critical role of Cld-1 in promoting susceptibility to CAC. Importantly, these effects of deregulated Cld-1 were not associated with altered tight junction integrity, but on its noncanonical role in regulating Notch/PI3K/Wnt/ β-CatSer552 signaling. Overall, outcome from our current studies identifies Cld-1 as potential prognostic biomarker for IBD severity and CAC, and a novel therapeutic target.