Two forms of genetic instability have been described in colorectal cancer: microsatellite instability and chromosomal instability. Microsatellite instability results from mutations in mismatch repair genes; chromosomal instability is the hallmark of many colorectal cancers, although it is not completely understood at the molecular level. As truncations of the Adenomatous Polyposis Coli (APC) gene are found in most colorectal tumours, we thought that mutations in APC might be responsible for chromosomal instability. To test this hypothesis, we examined mouse embryonic stem (ES) cells homozygous for Min (multiple intestinal neoplasia) or Apc1638T alleles. Here we show that Apc mutant ES cells display extensive chromosome and spindle aberrations, providing genetic evidence for a role of APC in chromosome segregation. Consistent with this, APC accumulates at the kinetochore during mitosis. Apc mutant cells form mitotic spindles with an abundance of microtubules that inefficiently connect with kinetochores. This phenotype is recapitulated by the induced expression of a 253-amino-acid carboxy-terminal fragment of APC in microsatellite unstable colorectal cancer cells. We conclude that loss of APC sequences that lie C-terminal to the beta-catenin regulatory domain contributes to chromosomal instability in colorectal cancer.