Mutations in the human adenomatous polyposis coli (APC) gene are thought to initiate colorectal tumorigenesis. The tumor suppressor function of APC is attributed primarily to its ability to regulate the WNT pathway by targeting the destruction of ss-catenin. We report here a novel role for APC in regulating degradation of the transcriptional co-repressor c-terminal binding protein-1 (CtBP1) through a proteasome-dependent process. Further, CtBP1 suppresses the expression of intestinal retinol dehydrogenases, which are required for retinoic acid production and intestinal differentiation. In support of a role for CtBP1 in initiation of colorectal cancer, adenomas taken from individuals with familial adenomatous polyposis contain high levels of CtBP1 protein in comparison to matched, uninvolved tissue. The relationship between APC and CtBP1 is conserved between humans and zebrafish and provides a mechanistic model explaining APC control of intestinal retinoic acid biosynthesis.