The FEZ1/LZTS1 (LZTS1) protein is frequently downregulated in human cancers of different histotypes. LZTS1 is expressed in normal tissues, and its introduction in cancer cells inhibits cell growth and suppresses tumorigenicity, owing to an accumulation of cells in G2/M. Here, we define its role in cell cycle regulation and tumor progression by generating Lzts1 knockout mice. In Lzts1(-/-) mouse embryo fibroblasts (MEFs), Cdc25C degradation was increased during M phase, resulting in decreased Cdk1 activity. As a consequence, Lzts1(-/-) MEFs showed accelerated mitotic progression, resistance to taxol- and nocodazole-induced M phase arrest, and improper chromosome segregation. Accordingly, Lzts1 deficiency was associated with an increased incidence of both spontaneous and carcinogen-induced cancers in mice.