Nucleon-nucleon (NN) cross sections are evaluated in neutron-rich matter using a scaling model according to density, momentum, and isospin dependent nucleon effective masses. It is found that the in-medium NN cross sections are not only reduced but also have a different isospin dependence compared with the free-space ones. Because of the neutron-proton effective mass splitting the difference between nn and pp scattering cross sections increases with the increasing isospin asymmetry of the medium. Within the transport model IBUU04, the in-medium NN cross sections are found to influence significantly the isospin transport in heavy-ion reactions. With the in-medium NN cross sections, a symmetry energy of E sym (ρ) ≈ 31.6(ρ/ρ 0 ) 0.69 was found most acceptable compared with both the MSU isospin diffusion data and the presently acceptable neutron-skin thickness in 208 Pb. The isospin dependent part K asy (ρ 0 ) of isobaric nuclear incompressibility was further narrowed down to −500 ± 50 MeV. The possibility of determining simultaneously the in-medium NN cross sections and the symmetry energy was also studied. The proton transverse flow, or even better the combined transverse flow of neutrons and protons, can be used as a probe of the in-medium NN cross sections without much hindrance from the uncertainties of the symmetry energy.