Flap endonuclease-1 (FEN1) is a multifunctional, structure-specific nuclease that has a critical role in maintaining human genome stability. FEN1 mutations have been detected in human cancer specimens and have been suggested to cause genomic instability and cancer predisposition. However, the exact relationship between FEN1 deficiency and cancer susceptibility remains unclear. In the current work, we report a novel colorectal cancer-associated FEN1 mutation, L209P. This mutant protein lacks the FEN, exonuclease (EXO) and gap endonuclease (GEN) activities of FEN1 but retains DNA-binding affinity. The L209P FEN1 variant interferes with the function of the wild-type FEN1 enzyme in a dominant-negative manner and impairs long-patch base excision repair in vitro and in vivo. Expression of L209P FEN1 sensitizes cells to DNA damage, resulting in endogenous genomic instability and cellular transformation, as well as tumor growth in a mouse xenograft model. These data indicate that human cancer-associated genetic alterations in the FEN1 gene can contribute substantially to cancer development.