Abstract Tight junctions have recently emerged as essential signaling regulators of proliferation and differentiation in epithelial tissues. Here, we aimed to identify the factors regulating claudin-7 expression in the colon, and analyzed the consequences of claudin-7 overexpression in colorectal carcinoma (CRC). In healthy human colonic crypts, claudin-7 expression was found to be low in the stem/progenitor cell compartment, where Tcf-4 activity is high, but strong in differentiated and postmitotic cells, where Tcf-4 is inactive. In contrast, claudin-7 was overexpressed in areas with high Tcf-4 target gene levels in CRC samples. In vitro, Tcf-4 was able to repress claudin-7 expression, and the high mobility group–box transcription factor Sox-9 was identified as an essential mediator of this effect. Claudin-7 was strongly expressed in the intestine of Sox-9–deficient mice and in CRC cells with low Sox transcriptional activity. Sox-9 overexpression in these cells reinstated claudin-7 repression, and residual claudin-7 was no longer localized along the basolateral membrane, but was instead restricted to tight junctions. Using HT-29Cl.16E CRC cell spheroids, we found that Sox-9–induced polarization was completely reversed after virus-mediated claudin-7 overexpression. Claudin-7 overexpression in this context increased Tcf-4 target gene expression, proliferation, and tumorigenicity after injection in nude mice. Our results indicate that Tcf-4 maintains low levels of claudin-7 at the bottom of colonic crypts, acting via Sox-9. This negative regulation seems to be defective in CRC, possibly due to decreased Sox-9 activity, and the resulting claudin-7 overexpression promotes a loss of tumor cell polarization and contributes to tumorigenesis. [Cancer Res 2008;68(11):4258–68]