Aberrant promoter region hypermethylation of upstream transcription factors may be responsible for silencing entire anti-neoplastic gene networks. In this study, we explored whether transcription factor coding gene, caudal-related homeobox 2 (CDX2), is silenced by promoter hypermethylation in lung cancer, and examined its potential tumor-suppressive functions. Semi-quantitative RT-PCR showed that four of six lung cancer cell lines exhibited no or weak CDX2 expression. Expression of CDX2 was correlated to CDX2 promoter region methylation status, as determined by methylation-specific PCR (MSP) and bisulfite sequencing. Restoration of CDX2 expression was induced by treatment with demethylating drug 5-aza-2'-deoxycytidine (5-AZA) in lung cancer cell lines. Methylation of CDX2 was common in human primary lung cancer (61 of 110 tumors, 55.45%), but no methylation was found in normal lung tissues. Re-expression of CDX2 suppressed lung cancer cell proliferation and blocked cells in G1 phase. β-catenin/TCF activity and downstream genes expression were inhibited by re-expression of CDX2, and increased by depletion of CDX2. In conclusion, CDX2 is frequently methylated in lung cancer, and expression of CDX2 is regulated by promoter region hypermethylation. CDX2 may serve as a tumor suppressor in lung cancer and inhibits lung cancer cell proliferation by suppressing Wnt signaling.