We have demonstrated that neuropeptide Y (NPY), abundantly produced by enteric neurons, is an important regulator of intestinal inflammation. However the role of NPY in the progression of chronic inflammation to tumorigenesis is unknown. We investigated whether NPY could modulate epithelial cell proliferation and apoptosis, and thus regulate tumorigenesis. Repeated cycles of dextran sodium sulfate (DSSn) was used to model inflammation-induced tumorigenesis in wild-type (WT) and NPY knockout (NPY^-/-) mice. Intestinal epithelial cell lines (T84) were used to assess the effects of NPY (0.1µM) on epithelial proliferation and apoptosis in vitro. DSSn-WT mice exhibited enhanced intestinal inflammation, polyp size and polyp number (7.5 ± 0.8) compared to DSSn-NPY^-/- mice (4 ± 0.5, P < 0.01). Accordingly, DSSn-WT mice also showed increased colonic epithelial proliferation (PCNA, Ki67) and reduced apoptosis (TUNEL) compared to DSSn- NPY^-/- mice. The apoptosis regulating microRNA, miR-375, was significantly down regulated in the colon of DSSn-WT (2 fold, P < 0.01) compared to DSSn-NPY^-/--mice. In vitro studies indicated that NPY promotes cell proliferation (increase in PCNA and β-catenin, P < 0.05) via phosphatidyl-inositol-3-kinase (PI3-K)- β-catenin signaling, suppressed miR-375 expression and reduced apoptosis (increase in phospho-Bad). NPY-treated cells also displayed increased c-myc and cyclin D1 and reduction in p21 (P < 0.05). Addition of miR-375 inhibitor to cells already treated with NPY did not further enhance the effects induced by NPY alone. Our findings demonstrate a novel regulation of inflammation-induced tumorigenesis by NPY-epithelial cross talk as mediated by activation of PI3-K-β-catenin signaling and down regulation of miR-375.