GRIM-19, a STAT3 inhibitory protein, was isolated as a growth suppressive gene product using a genome-wide expression knockdown screen as an Interferon/retinoid induced growth suppressors. Loss of expression and occurrence of mutations in the GRIM-19 gene in a variety of primary human cancers, suggesting its importance as a novel tumor suppressor. A number of DNA viral and cellular oncogenes are blocked by GRIM-19. We generated a Grim-19 conditional knockout mouse for understanding its tumor suppressor function in vivo. Deletion of Grim-19 significantly increased susceptibility of mice to chemical carcinogenesis resulting in development of squamous cell carcinomas. These tumors had high STAT3 activity and an increased expression of STAT3 responsive genes. Surprisingly, mono-allelic loss of Grim-19 gene was sufficient to promote carcinogen-induced formation of invasive squamous cell carcinomas. Loss of Grim-19 also caused mitochondrial electron transport dysfunction and assembly of the ETC complexes, and altered the expression of several cellular genes involved in glycolysis and promoted Warburg effect. These observations highlight the critical role of GRIM-19 as a cytokine-induced tumor suppressor.