Tumor microenvironment (TME) is commonly implicated in regulating the growth of tumors, but whether it can directly alter the genetics of tumors is not known. Genomic instability and dendritic cell (DC) infiltration are common features of several cancers, including multiple myeloma (MM). Mechanisms underlying genomic instability in MM are largely unknown. Here, we show that interaction between myeloma and DCs, but not monocytes, leads to rapid induction of the genomic mutator activation-induced cytidine deaminase (AID) and AID-dependent DNA double-strand breaks (DSBs) in myeloma cell lines as well as primary MM cells. Both myeloid as well as plasmacytoid DCs have the capacity to induce AID in tumor cells. The induction of AID and DSBs in tumor cells by DCs requires DC-tumor contact and is inhibited by blockade of receptor activator of NF-κB/receptor activator of NF-κB ligand (RANKL) interactions. AID-mediated genomic damage led to altered tumorigenicity and indolent behavior of tumor cells in vivo. These data show a novel pathway for the capacity of DCs in the TME to regulate genomic integrity. DC-mediated induction of AID and resultant genomic damage may therefore serve as a double-edged sword and be targeted by approaches such as RANKL inhibition already in the clinic.