Bystander cells of the tumor microenvironment show evidence of DNA damage and inflammation that can lead to their oncogenic transformation. Mediator(s) of cell-cell communication that brings about these pro-oncogenic pathologies has not been identified. We show here that cell-free chromatin (cfCh) released from dying cancer cells are the key mediators that trigger both DNA damage and inflammation in the surrounding healthy cells. When dying human cancer cells were cultured along with NIH3T3 mouse fibroblast cells, numerous cfCh emerged from them and rapidly entered into nuclei of bystander NIH3T3 cells to integrate into their genomes. This led to activation of H2AX and inflammatory cytokines NFκB, IL-6, TNFα and IFNγ. Genomic integration of cfCh triggered global deregulation of transcription and upregulation of pathways related to phagocytosis, DNA damage and inflammation. None of these activities were observed when living cancer cells were co-cultivated with NIH3T3 cells. However, upon intravenous injection into mice, both dead and live cells were found to be active. Living cancer cells are known to undergo extensive cell death when injected intravenously, and we observed that cfCh emerging from both types of cells integrated into genomes of cells of distant organs and induced DNA damage and inflammation. γH2AX and NFκB were frequently co-expressed in the same cells suggesting that DNA damage and inflammation are closely linked pathologies. As concurrent DNA damage and inflammation is a potent stimulus for oncogenic transformation, our results suggest that cfCh from dying cancer cells can transform cells of the microenvironment both locally and in distant organs providing a novel mechanism of tumor invasion and metastasis. The afore-described pro-oncogenic pathologies could be abrogated by concurrent treatment with chromatin neutralizing/degrading agents suggesting therapeutic possibilities.