Cyclooxygenase-2 (COX-2) catalyzes the rate-limiting step in the synthesis of prostaglandins. Its overexpression induces numerous tumor-promoting phenotypes and is associated with cancer metastasis and poor clinical outcome. Although COX-2 inhibitors are promising chemotherapeutic and chemopreventative agents for cancer, the risk of significant cardiovascular and gastrointestinal complications currently outweighs their potential benefits. Systemic complications of COX-2 inhibition could be avoided by specifically decreasing COX-2 expression in epithelial cells. To that end, we have investigated the signal transduction pathway regulating the COX-2 expression in response to DNA damage in breast epithelial cells. In variant human mammary epithelial cells that have silenced p16 (vHMEC), double-strand DNA damage or telomere malfunction results in a p53- and activin A–dependent induction of COX-2 and continued proliferation. In contrast, telomere malfunction in HMEC with an intact p16/Rb pathway induces cell cycle arrest. Importantly, in ductal carcinoma in situ lesions, high COX-2 expression is associated with high γH2AX, TRF2, activin A, and telomere malfunction. These data show that DNA damage and telomere malfunction can have both cell-autonomous and cell-nonautonomous consequences and can provide a novel mechanism for the propagation of tumorigenesis. Cancer Prev Res; 3(2); 190–201