Abstract Tumorigenesis is a multistep process that reflects intimate reciprocal interactions between epithelia and underlying stroma. However, tumor-initiating mechanisms coordinating transformation of both epithelial and stromal components are not defined. In humans and mice, initiation of colorectal cancer is universally associated with loss of guanylin and uroguanylin, the endogenous ligands for the tumor suppressor guanylyl cyclase C (GUCY2C), disrupting a network of homeostatic mechanisms along the crypt-surface axis. Here, we reveal that silencing GUCY2C in human colon cancer cells increases Akt-dependent TGF-β secretion, activating fibroblasts through TGF-β type I receptors and Smad3 phosphorylation. In turn, activating TGF-β signaling induces fibroblasts to secrete hepatocyte growth factor (HGF), reciprocally driving colon cancer cell proliferation through cMET-dependent signaling. Elimination of GUCY2C signaling in mice (Gucy2c−/−) produces intestinal desmoplasia, with increased reactive myofibroblasts, which is suppressed by anti-TGF-β antibodies or genetic silencing of Akt. Thus, GUCY2C coordinates intestinal epithelial–mesenchymal homeostasis through reciprocal paracrine circuits mediated by TGF-β and HGF. In that context, GUCY2C signaling constitutes a direct link between the initiation of colorectal cancer and the induction of its associated desmoplastic stromal niche. The recent regulatory approval of oral GUCY2C ligands to treat chronic gastrointestinal disorders underscores the potential therapeutic opportunity for oral GUCY2C hormone replacement to prevent remodeling of the microenvironment essential for colorectal tumorigenesis. Cancer Res; 73(22); 6654–66. ©2013 AACR.