A fatal transmissible tumor spread between individuals by biting has emerged in the Tasmanian devil (Sarcophilus harrisii), a carnivorous marsupial. Here we provide genetic evidence establishing that the tumor is clonal and therefore foreign to host devils. Thus, the disease is highly unusual because it is not just a tumor but also a tissue graft, passed between individuals without invoking an immune response. The MHC plays a key role in immune responses to both tumors and grafts. The most common mechanism of immune evasion by tumors is down-regulation of classical cell surface MHC molecules. Here we show that this mode of immune escape does not occur. However, because the tumor is a graft, it should still be recognized and rejected by the host’s immune system due to foreign cell surface antigens. Mixed lymphocyte responses showed a lack of alloreactivity between lymphocytes of different individuals in the affected population, indicating a paucity of MHC diversity. This result was verified by genotyping, providing a conclusive link between a loss of MHC diversity and spread of a disease through a wild population. This novel disease arose as a direct result of loss of genetic diversity and the aggressive behavior of the host species. The neoplastic clone continues to spread although the population, and, without active disease control by removal of affected animals and the isolation of disease free animals, the Tasmanian devil faces extinction.