Inactivation of the adenomatous polyposis coli (APC) tumor suppressor triggers the development of the majority of colorectal carcinomas. Although both the sequence of the APC gene, as well as the proteins that physically interact with APC have been known for several years, the mechanisms by which APC loss alter cellular differentiation are unknown. The long term goal of this study is to elucidate the molecular consequences of APC inactivation in-vivo. Some biochemical studies have suggested that APC negatively regulates the beta-catenin/Tcf complex, which functions as a transcriptional activator in the evolutionarily conserved Wnt signal transduction pathway. These observations have suggested a model in which the consequences of APC loss are determined by the transactivation of unknown cellular genes by beta-catenin/Tcf; however, some data are not consistent with this model. As vertebrate overexpression studies have resulted in contradictory findings, we have taken a genetic approach in Drosophila to address APC function, and are characterizing two closely related Drosophila homologs of APC (D-APC1 and D-APC2). Our studies on D-APC1 have provided the first genetic evidence that APC is required for the inhibition of beta-catenin/Tcf activity. Furthermore, we have shown that elevated beta- catenin/Tcf activity can induce misregulation of either cell fate determination, cell proliferation, or apoptotic cell death in different cell types. These observations have led to the hypothesis that APC is required for the negative regulation of beta-catenin/Tcf activity in different cell types. Upon APC inactivation, elevated beta-catenin/Tcf activity will induce changes in either cell fate determination, cell proliferation, or apoptotic death, the outcome being dependent on specific cell type. Several predictions can be made based on this hypothesis: 1, the inactivation of D-APC1 and D-APC2, either singly and/or simultaneously, will increase the activity of beta-catenin/Tcf; however the precise consequences of elevated beta-catenin/Tcf activity will be dependent on specific cell type; 2, upon loss of D-APC1 and/or D-APC2, different downstream effectors will be activated by beta-catenin/Tcf in different cell types, and these effectors will determine the phenotypic outcome of beta- catenin/Tcf activation. To test these predictions, we propose to define the function of D-APC2, and to determine which downstream effectors of beta-catenin/Tcf control the switch between induction of cell proliferation, apoptotic cell death, and cell fate determination. Understanding how the APC/beta-catenin/Tcf pathway regulates this switch may shed light on how the misregulation of these processes leads to the development of colonic carcinoma.