Klotho, a 1012 amino acid transmembrane protein, is a potent tumor suppressor in different cancer types. Klotho is composed of two internal repeats KL1 and KL2, and the tumor suppressor activity is primarily attributed to the KL1 domain. Despite its significant role in regulating various cancer-related pathways, the precise mechanism underlying its tumor suppressor activity remains unresolved. In this study, we aimed to identify the sequence responsible for the tumor suppressor function of Klotho and gain insights into its mechanism of action. To accomplish this, we generated expression vectors of truncated KL1 at the C and N-terminal regions and evaluated their ability to inhibit the colony formation of several cancer cell lines. Our findings demonstrated that truncated KL1 1–340 (KL340) effectively inhibited colony formation similar to KL1, while truncated KL1 1–320 (KL320) lost this activity. Furthermore, this correlated with the inhibitory effect of KL1 and KL340 on the Wnt/β-catenin pathway, whereas KL320 had no effect. Transcriptomic analysis of MCF-7 cells expressing the constructs revealed enriched pathways associated with tumor suppressor activity in KL1 and KL340. Interestingly, the α-fold predictor tool highlighted distinct differences in the α and β sheets of the TIM barrel fold of the truncated Klotho constructs, adding to our understanding of their structural variations. In summary, this study identified the 340 N-terminal amino acids as the sequence that possesses Klotho’s tumor suppressor activity and reveals a critical role in the 320–340 sequence for this function. It also provides a foundation for the development of Klotho-based therapeutic approaches for cancer treatment.