The tumor suppressor Adenomatous polyposis coli (APC) has roles in both Wnt signaling and in actin and microtubule organization. Within the cell, APC proteins have been reported to localize in the cytoplasm, at the cell cortex and in the nucleus. How these localizations relate to the functions of the protein is an aspect of APC biology that is poorly understood. Using Drosophila S2 cells, we have dissected the structural and functional requirements for the cortical localization of Drosophila APC2. Here, we show that both the Armadillo repeats and a novel C-terminal domain are necessary for the cortical localization of APC2 in S2 cells and in the embryo, and that neither domain alone is sufficient for this localization. Furthermore, we show that the Armadillo repeats mediate self-association of APC2 molecules. To test the function of the cortical localization of APC2, we asked whether an APC2 protein deleted for the C-terminal localization domain could rescue APC mutant defects in Wnt signaling and actin organization in the Drosophila embryo. We show that although cortical localization is required for the APC2 function in organizing actin, cortical localization is dispensable for its role in regulating Wnt signaling.