Mutations of the APC gene result in truncations of the APC protein. The “mutation cluster region (MCR)” is located approximately in the middle of the APC gene and overlaps with the region that binds to b-catenin. To investigate the functional relevance of truncated APC proteins, we have introduced tumour-associated mutations into the APC cDNA and analyzed the effects on the binding to b-catenin and on b-catenin destruction. We found that in most cases truncated APC retains reduced, but still significant binding to b-catenin as well as the capacity of negative regulation of Wnt signalling,. b-Catenin binding is mediated by the first of in total seven 20 amino acid repeats. This repeat is always retained in the APC fragments. Furthermore, upon closer analysis we found that a domain within the MCR is essential for the activity of the APC fragments. Deletion of this domain, which we have called b-catenin inhibitory domain (CID), results in a complete loss of APC activity. Altogether, we have come to a functional definition of the MCR: Mutations in tumour are selected for the presence of the first 20 amino acids repeats, lack of the third repeat and frequent inactivation of the CID domain. Our data also indicate that a certain control of activity of Wnt signalling needs to be retained in colon tumours to allow for “just-right-signalling”.