Aberrant activation of Wnt signaling caused by mutations in adenomatous polyposis coli (APC) or beta-catenin is a critical event in the development of human colorectal tumors. Wnt signaling stabilizes beta-catenin, which in turn associates with TCF/LEF family transcription factors, ultimately altering the expression of Wnt target genes. We have recently identified ICAT, a beta-catenin-interacting protein that interferes with the interaction between beta-catenin and TCF-4, thereby negatively regulating Wnt signaling. In the present study, we generated a recombinant adenovirus encoding ICAT and examined its effect on the growth of tumor cells. We found that Icat inhibits proliferation of colorectal tumor cells mutated in APC or beta-catenin and hepatocellular carcinoma cells mutated in AXIN: By contrast, Icat did not inhibit growth of either normal or tumor cells containing the wild-type APC, beta-catenin, and Axin genes. Icat also inhibited the anchorage-independent growth of colorectal tumor cells and tumorigenic growth of colorectal tumor xenografts. Furthermore, we found that Icat inhibits both dephosphorylation of Cdc2 and nuclear translocation of cyclin B1 and induces G(2) arrest followed by cell death in colorectal tumor cells. These results suggest that Wnt signaling is critical for the growth of colorectal tumors and some hepatocellular carcinomas and that expression of ICAT or drugs which mimic its effects may be useful in the treatment of these tumors.