T-box transcription factor 5 (TBX5) is a member of a phylogenetically conserved family of genes involved in the regulation of developmental processes. The function of TBX5 in cancer development is largely unclear. We identified that TBX5 was preferentially methylated in cancer using methylation-sensitive arbitrarily primed PCR. We aim to clarify the epigenetic inactivation, biological function and clinical significance of TBX5 in colon cancer. Promoter methylation was evaluated by combined bisulfite restriction analysis and bisulfite genomic sequencing. Cell proliferation was examined by cell viability assay and colony formation assay, apoptosis by flow cytometry and cell migration by wound-healing assay. TBX5 target genes were identified by cDNA microarray analysis. Cox regression model and log-rank test were used to identify independent predictors of prognosis. TBX5 was silenced or downregulated in 88% (7/8) colon cancer cell lines, but was expressed in normal colon tissues. Loss of gene expression was associated with promoter methylation. The biological function of TBX5 in human colon cancer cells was examined. Re-expression of TBX5 in silenced colon cancer cell lines suppressed colony formation (P<0.001), proliferation (P<0.001), migration and induced apoptosis (P<0.01). Induction of apoptosis was mediated through cross-talk of extrinsic apoptosis pathway, apoptotic BCL2-associated X protein and Granzyme A signaling cascades. TBX5 suppressed tumor cell proliferation and metastasis through the upregulation of cyclin-dependent kinase inhibitor 2A, metastasis suppressor 1 and downregulation of synuclein gamma and metastasis-associated protein 1 family member 2. TBX5 methylation was detected in 68% (71/105) of primary colon tumors. Multivariate analysis showed that patients with TBX5 methylation had a significantly poor overall survival (P=0.0007). In conclusion, we identified a novel functional tumor suppressor gene TBX5 inactivated by promoter methylation in colon cancer. Detection of methylated TBX5 may serve as a potential biomarker for the prognosis of this malignancy.