Forkhead box D3 (FOXD3), an important member of the forkhead box transcription factor family, has many biological functions. However, the role and signaling pathways of FOXD3 in colorectal cancer (CRC) are still unclear. We examined FOXD3 expression and methylation in normal colon mucosa, CRC cell lines and primary tumors by reverse transcription-polymerase chain reaction, methylation-specific PCR and bisulfite genomic sequencing. We also evaluated its tumor-suppressive function by examining its modulation of apoptosis under endoplasmic reticulum (ER) stress in CRC cells. The FOXD3 target signal pathway was identified by western blotting, immunofluorescence and chromatin immunoprecipitation. We found that FOXD3 was frequently methylated and silenced in CRC cell lines and was downregulated in CRC tissues compared with paired adjacent non-tumor tissues. Meanwhile, low FOXD3 protein expression was significantly correlated with poor histopathological grading, lymph node metastasis and poor prognosis of patients, indicating its potential as a tumor marker that may be of potential value as a therapeutic target for CRC. Moreover, restoration of FOXD3 expression inhibited the proliferation and migration of tumor cells. FOXD3 also increased mitochondrial apoptosis through the unfolded protein response under ER stress. Furthermore, we found that FOXD3 could bind directly to the promoter of p53 and enhance its expression. Knockdown of p53 impaired the effect of apoptosis induced by FOXD3. In conclusion, we showed for the first time that FOXD3, which is frequently methylated in CRC, acted as a tumor suppressor inducing tumor cell apoptosis under ER stress via p53.