The tumour suppressor gene adenomatous polyposis coli (APC) is mutated in most colorectal cancer cases, leading to the synthesis of truncated APC products and the stabilization of β-catenin. Truncated APC is almost always retained in tumour cells, suggesting that it serves an essential function. Here, RNA interference has been used to down-regulate truncated APC in several colorectal cancer cell lines expressing truncated APCs of different lengths, thereby performing an analysis covering most of the mutation cluster region (MCR). The consequences on proliferation in vitro, tumour formation in vivo and the level and transcriptional activity of β-catenin have been investigated. Down-regulation of truncated APC results in an inhibition of tumour cell population expansion in vitro in 6 cell lines out of 6 and inhibition of tumour outgrowth in vivo as analysed in one of these cell lines, HT29. This provides a general rule explaining the retention of truncated APC in colorectal tumours and defines it as a suitable target for therapeutic intervention. Actually, we also show that it is possible to design a shRNA that targets a specific truncated isoform of APC without altering the expression of wild-type APC. Down-regulation of truncated APC is accompanied by an up-regulation of the transcriptional activity of β-catenin in 5 out of 6 cell lines. Surprisingly, the increased signalling is associated in most cases (4 out of 5) with an up-regulation of β-catenin levels, indicating that truncated APC can still modulate wnt signalling through controlling the level of β-catenin. This control can happen even when truncated APC lacks the β-catenin inhibiting domain (CiD) involved in targeting β-catenin for proteasomal degradation. Thus, truncated APC is an essential component of colorectal cancer cells, required for cell proliferation, possibly by adjusting β-catenin signalling to the “just right” level.