The mechanisms of carcinogenesis are not completely clear in humans. NMOR and its metabolites may induce DNA damage by directly forming reactive oxygen species or compounds which crosslink DNA. In a rat model in 2013, it was observed that NMOR is hydroxylated, probably by a P450 enzyme, alpha to the N-nitroso moiety. This then decomposes into a diazonium-containing aldehyde which is capable of crosslinking DNA. 
Endogenous synthesis from morpholine in the digestive system is observed. NMOR can be generated from N-nitrosating species formed by salivary nitrite and stomach acid, potentially leading to more damage in individuals with acid reflux. H. pylori does not induce NMOR formation in vitro, though this has yet to be confirmed in vivo.
NMOR is in fact used to generate liver cancer models in rats. Along with N-diethylnitrosamine, it is the gold standard for producing hepatocarcinoma with 100% lung metastasis.