Most cases of colon cancer are initiated by mutation or loss of the tumor suppressor gene adenomatous polyposis coli (APC). APC controls many cellular functions including intestinal cell proliferation, differentiation, migration, and polarity. This chapter focuses on the role of APC in regulating a recently identified DNA demethylase system, consisting of a cytidine deaminase and a DNA glycosylase. A global decrease in DNA methylation is known to occur soon after loss of APC; however, how this occurs and its contribution to tumorigenesis has been unclear. In the absence of wild-type APC, ectopic expression of the DNA demethylase system leads to the hypomethylation of specific loci, including intestinal cell fating genes, and stabilizes intestinal cells in an undifferentiated state. Further, misregulation of this system may influence the acquisition of subsequent genetic mutations that drive tumorigenesis.