Inflammatory bowel disease (IBD), including Crohn's disease and ulcerative colitis, is characterized by chronic mucosal injury and the infiltration of inflammatory cells. Tumor suppressor FOXO3 regulates gene expression and its translocation to the cytosol leads to the abrogation of its transcriptional function. We have previously shown that bacterial infection regulates FOXO3 in intestinal epithelial cells and increases cytokine levels. As TNFalpha is a major contributor in intestinal inflammation, the aim of this study was to assess its effect on FOXO3 and FOXO3's contribution to intestinal inflammation in vitro and in vivo. TNFalpha induces the translocation of nuclear FOXO3 into the cytosol where it undergoes proteasomal degradation in human intestinal HT-29 cells. Proximally, the PI3K and IKK pathways mediate TNFalpha-induced FOXO3 phosphorylation. In FOXO3-silenced HT-29 cells, TNFalpha-induced IL-8 expression is increased approximately 83%. In vivo, Foxo3 is present in the nuclei and cytosol of colonic crypt epithelia. In DSS-induced colonic inflammation, Foxo3's nuclear localization is lost and it is only found in the cytosol. Consistent with a role for Foxo3 in colitis, Foxo3-deficient mice treated with DSS developed more severe colonic inflammation with an increased number of intraepithelial lymphocytes and PMNs infiltrated in the epithelia, than wild-type mice. In summary, TNFalpha inactivates FOXO3 in intestinal epithelia through the PI3K and IKK pathways and FOXO3 inactivation leads to the upregulation of IL-8 in vitro; in vivo Foxo3 is in the cytosol of inflamed colonic epithelia and Foxo3 deficiency leads to severe intestinal inflammation.