The tumor suppressor adenomatous polyposis coli (APC) is mutated in familial adenomatous polyposis and in sporadic colorectal tumors. APC forms a complex with beta-catenin, Axin, and glycogen synthase kinase-3beta and induces the degradation of beta-catenin. In the present study, we examined whether APC association with Axin is required for degradation of beta-catenin. We found that a fragment of APC that induces beta-catenin degradation was rendered inactive by disruption of its Axin-binding sites. Also, overexpression of an Axin fragment spanning the regulator of the G-protein signaling domain inhibited APC-mediated beta-catenin degradation. An APC fragment with mutated beta-catenin-binding sites but intact Axin-binding sites also failed to induce degradation of beta-catenin. These results suggest that APC requires interaction with Axin and beta-catenin to down-regulate beta-catenin.