The APC tumor-suppressor protein associates with beta-catenin, a cell adhesion protein that is upregulated by the WNT1 oncogene. We examined the effects of exogenous APC expression on the distribution and amount of beta-catenin in a colorectal cancer cell containing only mutant APC. Expression of wild-type APC caused a pronounced reduction in total beta-catenin levels by eliminating an excessive supply of cytoplasmic beta-catenin indigenous to the SW480 colorectal cancer cell line. This reduction was due to an enhanced rate of beta-catenin protein degradation. Truncated mutant APC proteins, characteristic of those associated with cancer, lacked this activity. Mutational analysis revealed that the central region of the APC protein, which is typically deleted or severely truncated in tumors, was responsible for the down-regulation of beta-catenin. These results suggest that the tumor-suppressor activity of mutant APC may be compromised due to a defect in its ability to regulate beta-catenin.