Mutations in the adenomatous polyposis coli gene (which encodes a protein called APC) are associated with the formation of intestinal polyps and colon cancers. To facilitate the functional study of APC we have isolated its Drosophila homolog (D-APC) by screening an expression library with an antibody against human APC. The isolated cDNA encodes a predicted 2416-amino acid protein containing significant homology to multiple domains of mammalian APCs. D-APC has seven complete armadillo repeats with 60% identity to its human homolog, one beta-catenin binding site, and up to 7 copies of a 20-amino acid repeat with the average of 50% identity to human APC at amino acid level. D-APC, like its human counterpart, also contains a basic domain. Expression of the domain of D-APC homologous to the region required for beta-catenin down-regulation resulted in down-regulation of intracellular beta-catenin in a mammalian cell line. This same region bound to the Armadillo (Arm) protein, in vitro, the Drosophila homolog of beta-catenin. D-APC RNA and protein expression is very low, if detectable at all, during stages when Arm protein accumulates in a striped pattern in the epidermis of the Drosophila embryos. Removing zygotic D-APC expression did not alter Arm protein distribution, and the final cuticle pattern was not affected significantly. As observed in the rodent, high levels of D-APC expression have been detected in the central nervous system, suggesting a role for D-APC in central nervous system formation.