The adenomatous polyposis coli (APC) tumor suppressor is mutated in the vast majority of human colorectal cancers (CRC) and leads to deregulated Wnt signaling. To determine whether Apc disruption is required for tumor maintenance, we developed a mouse model of CRC whereby Apc can be conditionally suppressed using a doxycycline-regulated shRNA. Apc suppression produces adenomas in both the small intestine and colon that, in the presence of Kras and p53 mutations, can progress to invasive carcinoma. In established tumors, Apc restoration drives rapid and widespread tumor-cell differentiation and sustained regression without relapse. Tumor regression is accompanied by the re-establishment of normal crypt-villus homeostasis, such that once aberrantly proliferating cells reacquire self-renewal and multi-lineage differentiation capability. Our study reveals that CRC cells can revert to functioning normal cells given appropriate signals and provide compelling in vivo validation of the Wnt pathway as a therapeutic target for treatment of CRC.