The expression of thrombomodulin (TM), a calcium-dependent adhesion molecule, is frequently downregulated in various cancer types. However, the mechanism responsible for the low expression level of TM in tumorigenesis is unknown. Here, an inverse expression of TM and Snail was detected in different cancer cell lines. We further confirmed this inverse relation using the epithelial-mesenchymal transition cell model in HaCaT and A431 cells. We demonstrated that Snail suppressed TM expression by binding to E-box (CACCTG) in TM promoter. Moreover, TM knockdown by short hairpin RNA disrupted E-cadherin-mediated cell junctions and contributed to tumorigenesis. In the calcium switch assay, E-cadherin lost the ability to associate with β-catenin and accumulated in cytoplasm in TM knockdown cells. Meanwhile, wound healing and invasive assays showed that TM knockdown promoted cell motility. A subcutaneous injection of TM knockdown transfectants into immunocompromised mice induced squamous cell carcinoma-like tumors. Besides, forced expression of murine TM in TM knockdown cells made the cells reassume epithelium-like morphology and increased calcium-dependent association of E-cadherin and β-catenin. In conclusion, TM, a novel downstream target of Snail in epithelial-mesenchymal transition, is required for maintaining epithelial morphology and functions as a tumor suppressor.