Recent studies have linked atopic dermatitis (AD) to colorectal cancer (CRC) risk. Their causality and potential molecular mechanisms remain unclear. We performed Mendelian randomization (MR) analysis to evaluate the causality between AD and CRC. Summary statistic data-based Mendelian randomization (SMR) analysis was used to identify CRC-related causal genes. Transcriptome analyses and immunohistochemical methods were applied to investigate the shared gene signature and potential mechanisms that contribute to the pathogenesis of both AD and CRC. A predictive analysis was performed to examine the shared gene signature associated with immunotherapy response in CRC. MR analysis indicated a causal association between AD and a decreased risk of CRC. SMR analysis uncovered TET2 as a CRC-related causal gene, showing an inverse relationship with the risk of CRC. Transcriptome analyses identified TET2 as a shared gene signature between AD and CRC. Decreased TET2 expression is associated with impaired demethylation and worse prognosis in CRC patients. We observed ten pathways related to the inflammatory response and immune regulation that may be shared mechanisms underlying both AD and CRC. These findings were validated through single-cell analysis. TET2 shows promise as a powerful predictive biomarker for cancer prognosis and immunotherapy response in CRC. There is a causal association between AD and a decreased risk of CRC. AD may influence the occurrence of CRC by modulating immune and inflammatory responses. TET2 could serve as a potential biomarker for prognosis and may be considered a novel therapeutic target for methylation and immune-related interventions.