Poorly differentiated colorectal cancers (CRCs) are more aggressive and lack targeted therapies. We and others previously reported the predominant role of tumor-suppressor NDRG2 in promoting CRC differentiation, but the underlying mechanism is largely unknown. Herein, we demonstrate that NDRG2 induction of CRC cell differentiation is dependent on the repression of E3 ligase Skp2 activity. In patients and Ndrg2 knockout mice, NDRG2 and Skp2 are negatively correlated and associated with cell differentiation stage. Further, NDRG2 suppression of Skp2 contributes to the inductions and stabilizations of p21 and p27, which are Skp2 target proteins for degradation. The reduction of either p21 or p27 levels by shRNA can decrease NDRG2-induced AKP activity and resume cell growth inhibition, thus both p21 and p27 are required for NDRG2 effect on the promotion of cell differentiation in CRCs. The mechanistic study shows that NDRG2 suppresses β-catenin nuclear translocation and decreases the occupancy of β-catenin/TCF complex on Skp2 promoter, potentially through dephosphorylating GSK-3β. By subjecting a series of NDRG2 deletion mutants to Skp2 expression, the loss of NH2-terminal domain can completely abolish NDRG2-dependent differentiation induction. Supporting the biological significance of the reciprocal relationship between NDRG2 and Skp2, an NDRG2low/Skp2high gene expression signature correlates with poor CRC patient outcome and could be considered as a diagnostic marker of CRCs.