In epithelia, normal cells recognize and extrude out newly emerged transformed cells by competition. This process is the most fundamental epithelial defence against cancer, whose occasional failure promotes oncogenesis. However, little is known about what factors determine the success or failure of this defence. Here we report that mechanical stiffening of extracellular matrix attenuates the epithelial defence against activated HRasV12-transformed cells. Using photoconversion labelling, protein tracking, and loss-of-function mutations, we attribute this attenuation to stiffening-induced perinuclear sequestration of a cytoskeletal protein, filamin. On soft matrix mimicking healthy epithelium, filamin exists as a dynamically single population, which moves to the normal cell-transformed cell interface to initiate transformed cell-extrusion. But, on stiff matrix mimicking fibrotic epithelium, filamin redistributes into two dynamically distinct populations, including a new perinuclear pool, which cannot move to the cell-cell interface. A tug-of-war between filamin-Cdc42 and filamin-perinuclear cytoskeleton interactions controls this differential filamin localization and hence, determines the success or failure of epithelial defence on soft versus stiff matrix. Together, our study reveals how pathological matrix stiffening leads to a failed epithelial defence at the initial stage of oncogenesis.