Transforming growth factor-beta (TGF-β), a pluripotent cytokine expressed in the colon, has a crucial but paradoxical role in colorectal cancer (CRC). TGF-β is a potent proliferation inhibitor of normal colon epithelial cells and acts as a tumor suppressor. However, TGF-β also promotes invasion and metastasis during late-stage CRC, thereby acting as an oncogene. Thus, understanding the factors behind the paradoxical roles of TGF-β and elucidating the mechanisms by which TGF-β-induced proliferation inhibition is impaired in CRC are necessary. Here, we found that the N-Myc tumor suppressor gene downstream-regulated gene NDRG2 (N-Myc downstream-regulated gene 2), which is a TGF-β-responsive gene, abrogated TGF-β-induced epithelial-mesenchymal transition (EMT) and further inhibited the invasion and migration of CRC cells. TGF-β positively induced NDRG2 expression through direct transactivation mediated by Sp1 and by abrogation of the repressive c-Myc/Miz-1 complex on NDRG2 promoter in normal epithelial cells. Aberrant hypermethylation of NDRG2, which could respond to TGF-β growth inhibition signaling, abrogated the inhibitory effect of NDRG2 in TGF-β-induced EMT in CRCs. Reduced NDRG2 expression was highly correlated with the invasion stage and metastasis of CRC. Our study establishes that NDRG2 is a new tumor suppressor gene that responds to TGF-β anti-proliferative signaling and tips the balance of oncogenic TGF-β during late-stage CRC.