Biallelic mutation of the ADENOMATOUS POLYPOSIS COLI (APC) gene is a hallmark of sporadic colorectal cancer and colorectal, duodenal and desmoid tumours that develop in familial adenomatous polyposis (FAP) patients. The mutations affecting both APC alleles are interdependent, the position of the first APC mutation determining where the second hit will occur. This results in a complex pattern of mutation distribution in the APC sequence that translates into the stabilization of beta-catenin that in turn feeds the affected cells with a permanent mitogenic signal. We describe here a new APC domain, the beta-catenin inhibitory domain (CID) of APC located between the second and third 20 amino acid repeats and therefore present in many truncated APC products found in human tumours. In truncated APC, the CID is absolutely necessary to down-regulate the transcriptional activity and the level of beta-catenin, even when an axin/conductin binding site is present. The activity of the CID is dramatically reduced in several colon cancer cell lines and can be inhibited by shorter truncated APC lacking the CID. The CID is a direct target of the selective pressure acting on APC during tumourigenesis. It explains the interdependence of both APC mutations, not only in colorectal but also in duodenal and desmoid tumours.