TGFbeta exerts a potent tumor-suppressive effect in the human colon carcinoma CBS and Moser cells. However, TGFbeta can also function as a tumor promoter. The mechanisms underlying the tumor promoting effect of TGFbeta are not understood. Both the CBS and Moser cells were found to express mutant (truncated) APC. Expression of this form of APC did not interfere with the tumor-suppressive function of TGFbeta. However, when APC expression was knocked down in these cells, TGFbeta function switched from that of tumor suppression to that of tumor promotion. TGFbeta stimulated cellular invasion and anchorage-independent growth in APC knocked-down cells. Knocking down APC expression abrogated the ability of TGFbeta to induce the expression of the tumor suppressor E-cadherin and the cyclin dependent kinase inhibitor p21/Waf1. TGFbeta now stimulated the constitutive TCF transcriptional activation activity associated with the beta-catenin/Wnt pathway in the APC knocked-down cells. Thus, the level of APC expression determined the type of TGFbeta function in these human colon carcinoma cells.