Nonresolving inflammatory processes affect all stages of carcinogenesis. Lactoferrin, a member of the transferrin family, is involved in the innate immune response and anti-inflammatory, anti-microbial, and anti-tumor activities. We previously found that lactoferrin is significantly down-regulated in specimens of nasopharyngeal carcinoma (NPC) and negatively associated with tumor progression, metastasis, and prognosis of patients with NPC. Additionally, lactoferrin expression levels are decreased in colorectal cancer as compared with normal tissue. Lactoferrin levels are also increased in the various phases of inflammation and dysplasia in an azoxymethane-dextran sulfate sodium (AOM-DSS) model of colitis-associated colon cancer (CAC). We thus hypothesized that the anti-inflammatory function of lactoferrin may contribute to its anti-tumor activity. Here we generated a new Lactoferrin knockout mouse model in which the mice are fertile, develop normally, and display no gross morphological abnormalities. We then challenged these mice with chemically induced intestinal inflammation to investigate the role of lactoferrin in inflammation and cancer development. Lactoferrin knockout mice demonstrated a great susceptibility to inflammation-induced colorectal dysplasia, and this characteristic may be related to inhibition of NF-κB and AKT/mTOR signaling as well as regulation of cell apoptosis and proliferation. Our results suggest that the protective roles of lactoferrin in colorectal mucosal immunity and inflammation-related malignant transformation, along with a deficiency in certain components of the innate immune system, may lead to serious consequences under conditions of inflammatory insult.