Deletion of 3p12-22 is frequent in multiple cancer types, indicating the presence of critical tumor-suppressor genes (TSGs) at this region. We studied a novel candidate TSG, CMTM7, located at the 3p22.3 CMTM-gene cluster, for its tumor-suppressive functions and related mechanisms. The three CMTM genes, CMTM6, 7 and 8, are broadly expressed in human normal adult tissues and normal epithelial cell lines. Only CMTM7 is frequently silenced or downregulated in esophageal and nasopharyngeal cell lines, but uncommon in other carcinoma cell lines. Immunostaining of tissue microarrays for CMTM7 protein showed its downregulation or absence in esophageal, gastric, pancreatic, liver, lung and cervix tumor tissues. Promoter CpG methylation and loss of heterozygosity were both found contributing to CMTM7 downregulation. Ectopic expression of CMTM7 in carcinoma cells inhibits cell proliferation, motility and tumor formation in nude mice, but not in immortalized normal cells, suggesting a tumor inhibitory role of CMTM7. The tumor-suppressive function of CMTM7 is associated with its role in G1/S cell cycle arrest, through upregulating p27 and downregulating cyclin-dependent kinase 2 (CDK2) and 6 (CDK6). Moreover, CMTM7 could promote epidermal growth factor receptor (EGFR) internalization, and further suppress AKT signaling pathway. Thus, our findings suggest that CMTM7 is a novel 3p22 tumor suppressor regulating G1/S transition and EGFR/AKT signaling during tumor pathogenesis.