Identifying the functions of proteins, which associate with specific subnuclear structures, is critical to understanding eukaryotic nuclear dynamics. Sp100 is a prototypical protein of ND10/PML nuclear bodies, which colocalizes with Daxx and the proto-oncogenic PML. Sp100 isoforms contain SAND, PHD, Bromo, and HMG domains and are highly sumoylated, all characteristics suggestive of a role in chromatin-mediated gene regulation. A role for Sp100 in oncogenesis has not been defined previously. Using selective Sp100 isoform-knockdown approaches, we show that normal human diploid fibroblasts with reduced Sp100 levels rapidly senesce. Subsequently, small rapidly dividing Sp100 minus cells emerge from the senescing fibroblasts and are found to be highly tumorigenic in nude mice. The derivation of these tumorigenic cells from the parental fibroblasts is confirmed by microsatellite analysis. The small rapidly dividing Sp100 minus cells now also lack ND10/PML bodies, and exhibit genomic instability and p53 cytoplasmic sequestration. They have also activated MYC, RAS, and TERT pathways and express mesenchymal to epithelial transdifferentiation (MET) markers. Reintroduction of expression of only the Sp100A isoform is sufficient to maintain senescence and to inhibit emergence of the highly tumorigenic cells. Global transcriptome studies, quantitative PCR, and protein studies, as well as immunolocalization studies during the course of the transformation, reveal that a transient expression of stem cell markers precedes the malignant transformation. These results identify a role for Sp100 as a tumor suppressor in addition to its role in maintaining ND10/PML bodies and in the epigenetic regulation of gene expression.