The adenomatous polyposis coli (APC) gene was first identified as the gene mutated in an inherited syndrome of colon cancer predisposition known as familial adenomatous polyposis coli (FAP). Mutation of APC is also found in 80% of all colorectal adenomas and carcinomas and is one of the earliest mutations in colon cancer progression. Similar to other tumor suppressor genes, both APC alleles are inactivated by mutation in colon tumors, resulting in the loss of full-length protein in tumor cells. The functional significance of altering APC is the dysregulation of several physiologic processes that govern colonic epithelial cell homeostasis, which include cell cycle progression, migration, differentiation, and apoptosis. Roles for APC in some of these processes are in large part attributable to its ability to regulate cytosolic levels of the signaling molecule beta-catenin and to affect the transcriptional profile in cells. This article summarizes numerous genetic, biochemical, and cell biologic studies on the mechanisms of APC-mediated tumor suppression. Mouse models of FAP, in which the APC gene has been genetically inactivated, have been particularly useful in testing therapeutic and chemopreventive strategies. These data have significant implications for colorectal cancer treatment approaches as well as for understanding other disease genes and cancers of other tissue types.