Tumor budding in colorectal cancer is likened to an epithelial-mesenchymal transition (EMT) characterized predominantly by loss of E-cadherin and up-regulation of E-cadherin repressors like TWIST1 and TWIST2. Here we investigate a possible epigenetic link between TWIST proteins and the tumor budding phenotype. TWIST1 and TWIST2 promoter methylation and protein expression were investigated in six cell lines and further correlated with tumor budding in patient cohort 1 (n = 185). Patient cohort 2 (n = 112) was used to assess prognostic effects. Laser capture microdissection (LCM) of tumor epithelium and stroma from low- and high-grade budding cancers was performed. In colorectal cancers, TWIST1 and TWIST2 expression was essentially restricted to stromal cells. LCM results of a high-grade budding case show positive TWIST1 and TWIST2 stroma and no methylation, while the low-grade budding case was characterized by negative stroma and strong hypermethylation. TWIST1 stromal cell staining was associated with adverse features like more advanced pT (p = 0.0044), lymph node metastasis (p = 0.0301), lymphatic vessel invasion (p = 0.0373), perineural invasion (p = 0.0109) and worse overall survival time (p = 0.0226). Stromal cells may influence tumor budding in colorectal cancers through expression of TWIST1. Hypermethylation of the tumor stroma may represent an alternative mechanism for regulation of TWIST1.