Functional deficiency of the FEN1 gene has been suggested to cause genomic instability and cancer predisposition. We have identified a group of FEN1 mutations in human cancer specimens. Most of these mutations abrogated two of three nuclease activities of flap endonuclease 1 (FEN1). To demonstrate the etiological significance of these somatic mutations, we inbred a mouse line harboring the E160D mutation representing mutations identified in human cancers. Selective elimination of nuclease activities led to frequent spontaneous mutations and accumulation of incompletely digested DNA fragments in apoptotic cells. The mutant mice were predisposed to autoimmunity, chronic inflammation and cancers. The mutator phenotype results in the initiation of cancer, whereas chronic inflammation promotes the cancer progression. The current work exemplifies the approach of studying the mechanisms of individual polymorphisms and somatic mutations in cancer development, and may serve as a reference in developing new therapeutic regimens through the suppression of inflammatory responses.