Mutations in the adenomatous polyposis coli (APC) gene result in uncontrolled proliferation of intestinal epithelial cells and are associated with the earliest stages of colorectal carcinogenesis. Cyclooxygenase-2 (COX-2) is elevated in human colorectal cancers and plays an important role in colorectal tumorigenesis; however, the mechanisms by which APC mutations result in increased COX-2 expression remain unclear. We utilized APC mutant zebrafish and human cancer cells to investigate how APC modulates COX-2 expression. We report that COX-2 is upregulated in APC mutant zebrafish owing to a deficiency in retinoic acid biosynthesis. Treatment of both APC mutant zebrafish and human carcinoma cell lines with retinoic acid significantly reduces COX-2 expression. Retinoic acid regulates COX-2 levels by a mechanism that involves participation of the transcription factor C/EBP-beta. APC mutant zebrafish express higher levels of C/EBP-beta than wild-type animals and retinoic acid supplementation reduces C/EBP-beta expression to basal levels. Both morpholino knockdown of C/EBP-beta in APC mutant zebrafish and silencing of C/EBP-beta using siRNA in HT29 colon cancer cells robustly decreases COX-2 expression. Our findings support a sequence of events in which mutations in APC result in impaired retinoic acid biosynthesis, elevated levels of C/EBP-beta, upregulation of COX-2, increased PGE2 accumulation and activation of Wnt target genes.