The evolutionarily conserved Wnt/Wingless signal transduction pathway directs cell proliferation, cell fate, and cell death during development in metazoans and is inappropriately activated in several types of cancer. The majority of colorectal carcinomas contain truncating mutations in the adenomatous polyposis coli (APC) tumor suppressor, a negative regulator of Wnt/Wingless signaling. Here, we demonstrate that Drosophila Apc homologs also have an activating role in both physiological and ectopic Wingless signaling. The Apc amino terminus is important for its activating function, whereas the beta-catenin binding sites are dispensable. Apc likely promotes Wingless transduction through down-regulation of Axin, a negative regulator of Wingless signaling. Given the evolutionary conservation of APC in Wnt signal transduction, an activating role may also be present in vertebrates with relevance to development and cancer.